Economy: Monetary and Fiscal Policy

Lord Higgins: asked Her Majesty's Government:
	What steps they are taking to co-ordinate monetary and fiscal policy.

Lord Davies of Oldham: My Lords, monetary and fiscal policy are conducted within a clear and transparent framework. The Government set the Monetary Policy Committee's operational target and the fiscal rules. In addition, there is a regular exchange of information between the Treasury and the Bank of England.

Lord Higgins: My Lords, I thank the Minister for that reply. Is it not painfully obvious that giving the Bank of England independence and a target to control inflation with only short-term interest rates as a weapon cannot work unless fiscal policy is used as well? If we are to continue with the charade of the Governor having to write to the Chancellor of the Exchequer to say why he has failed, should there not also be letters to the Governor of the Bank of England from the Chancellor explaining why he has made the Governor's task impossible? Is not fiscal policy out of control, with massive increases in borrowing, subsequent to the Budget, due to changes in tax and expenditure policy? How much has borrowing increased above the amount projected at the time of the Budget, and will this be funded from the public, not the banks?

Lord Davies of Oldham: Well, my Lords, borrowing will of course be funded from the public, but the International Monetary Fund passed a judgment on the Budget and considered it to be fully operational and effective against what we all recognise to be a difficult international situation. Importantly, the Bank of England has the responsibility for inflation. That is very difficult task, given the pressure of world prices at present, and we will go through a period—a short period—in which inflation will be above the target rate. However, it is quite clear from our predictions and those of independent forecasters that in 2009 the policies being pursued will return inflation to within the framework, where it has been for a decade under this Government.

Lord Barnett: My Lords, is it not wrong to pretend that massive increases in oil and food prices will not mean a cut in living standards? Would it not be better and easier to co-ordinate fiscal and monetary policy if there were either a cut in public expenditure and/or a tax increase? I am not sure that that is what the noble Lord, Lord Higgins, or the Opposition Front Bench are suggesting, but no doubt they will tell us.

Lord Davies of Oldham: Of course there is a challenge at present; the whole world recognises that. The difference is that the British economy is almost uniquely well placed to meet this challenge. We start off with a low inflation rate. I note that one or two noble Lords opposite are regarding these comments with less than the approval I would seek. Let me make it clear that our inflation rates both now and predicted are below those in Germany, France and the United States, and historically, even at their highest, they are only half of what was the norm under the previous Administration in the 1980s.

Lord Newby: My Lords, does the Minister agree that the slow-down will inevitably lead to a fall in tax revenues and an increase in expenditure, particularly on unemployment benefits? On their current policies, the Government are set to break their own fiscal rules. Do they intend to follow the advice of the noble Lord, Lord Barnett, by raising taxes or reducing expenditure elsewhere, or do they accept that they simply have to break the rules?

Lord Davies of Oldham: My Lords, the noble Lord, as ever, accurately identifies the difficulties. He will have to wait to see what our solutions to these difficulties are. We will again look at these matters and comment further on them in the Pre-Budget Report, which is not asking the noble Lord to wait a great deal of time in parliamentary terms. There are challenges to the public finances at this stage, but the noble Lord will recognise the mass of contradictions that could emerge from all sides. One side will suggest, as he does, a substantial cut in government revenues, while the other will suggest that there are windfall benefits from the higher oil price. The Government will reach a judicious position in due course.

Lord Forsyth of Drumlean: My Lords, why are the Government refusing to disclose the amount, which is clearly substantial, that is being provided to the banks in increased liquidity, and why is that amount being treated as off balance sheet?

Lord Davies of Oldham: My Lords, the noble Lord will recognise that the Government's liquidity position with the banks is being adopted by all significant economies. He will be all too well aware of the extent to which the United States Government have been greatly concerned to increase liquidity for their banking structure as well. I recognise that the noble Lord is very much in favour of transparency —probably more so when this Government are in office than when his own side might be. Let me emphasise on the issue of transparency that the concern is to preserve confidence in the banking structure when we all recognise that there are significant shocks both internally and externally. He will know the magnitude of the problems that the American economy is wrestling with. I am not sure that his preferred remedy of complete transparency meets the seriousness of the situation.

Lord Sheldon: My Lords, does the Minister agree that the oil price increases need to be dealt with over a fairly shortish period? That means that there must be either some reduction in public expenditure or tax increases, maybe for a limited time only, but it is a solution that may be available to us.

Lord Davies of Oldham: My Lords, of course, my noble friend is wise in these matters, and he is right that that may be one of the solutions available to us. The strength of the British economy means that the methods that we have to adopt will be considerably less drastic than they would be if we were operating with significant deficits and high unemployment. My noble friend will have to join the noble Lord, Lord Newby, and the whole House in awaiting the Pre-Budget Report, which is not too far distant.

Internet: Privacy

Baroness Miller of Chilthorne Domer: asked Her Majesty's Government:
	What guidance they have issued to internet service providers on when and how they can intercept their customers' website use; and what information they have made available to the public about the privacy issues involved.

Lord West of Spithead: My Lords, the Home Office provides guidance about lawful interception conducted under warrant for law-enforcement purposes. This is separate from advice provided by the Department for Business, Enterprise and Regulatory Reform on the relevant business facing legislation. ISPs may, with the consent of the consumer, use information about consumers' internet use for the provision of value-added services. The Information Commissioner provides information to the public on privacy issues.

Baroness Miller of Chilthorne Domer: My Lords, the Minister will be aware that my Question was prompted by the recent trials between BT and Phorm, which were conducted without the permission of subscribers. Does he agree that at the very least the British public must be offered an opt-in system when such trials or the scheme itself is put online? Furthermore, is he aware that in the US, Congress has asked that this scheme be put on hold while the privacy implications are examined? Will he do the same?

Lord West of Spithead: My Lords, the noble Baroness has a particular interest in this issue and she raises some very important and good points. Before I looked into it as a result of the Question, I certainly had not addressed it. The Home Office, BERR and the Information Commissioner were not aware of the two tests conducted by BT, which was not good. I know that the Information Commissioner's Office and BERR are now investigating that very issue, which is very appropriate. Since then, BT has approached all three authorities about a trial with around 10,000 broadband subscribers.
	The right measures are in place to look at that, but we possibly need a test case to see whether this is interception or not. I am not clear in my own mind on that yet and I will take away that task to see whether it is. If it is, it will be covered by a chunk of the regulation of investigatory powers legislation. If it is not, we will need to think about how we will deal with it. I was aware that the Americans have an issue with it. At the moment, the Information Commissioner has given advice to people and we are protected.

Viscount Bridgeman: My Lords, in view of the concern expressed by the noble Baroness about privacy, will the Government withdraw their plans for a communications data Bill to set up a database logging every private phone call and e-mail? There has been enormous opposition to the idea, including that from the Information Commissioner.

Lord West of Spithead: My Lords, the noble Viscount is referring to the IMP. It is very early days as to where we go on this and it relates to entirely new methods of how telecommunications firms will transmit and move data. It is also early days to see how this will impact on any aspects of intercept. We have come to no decisions on any of that. It is still being looked at. It is too early to make any statement.

Lord Broers: My Lords, last year, in a Science and Technology Committee report of this House on internet security, the committee recommended that a system of kite marks be established that identified respectable behaviour from ISPs. That recommendation was rejected by the Government. In a follow-up report, the noble Baroness, Lady Vadera, said that the Government would look into this proposition. How is that going?

Lord West of Spithead: My Lords, I do not know the detail of that. I know that in the Data Sharing Review, published in July, the Information Commissioner, Richard Thomas, and Dr Mark Walport came up with a series of proposals. Perhaps I may get back in writing on that point.

Lord Roberts of Llandudno: My Lords, following my noble friend Lady Miller's Question and the use of this technology, especially by Virgin Media, to write to 800 customers warning them about this downloading, is it not a real cause for concern that this can be used to infringe on a person's privacy in this way?

Lord West of Spithead: My Lords, we have to careful because very often people do not realise how much data are used by these various firms—they know your URLs, they know your name and they know when you log on and log off. All of these data are there already. It is quite legal, for example, if I go on to Google and say that I am a sailor and interested in ships, that when my web page comes up the adverts that appear on it tend to deal with ships and shipping. They already do this. What they are now asking to do through Phorm is to go further. That is why we have to monitor this issue closely. The ICO needs to get involved much more than he is. He has issued advice on Phorm on his website and we are keeping a close eye on this. I have made the point about whether this reaches into the regulation of investigatory powers legislation and whether we need a trial case to establish that. Otherwise we are covered. I used to say to my people in the Navy that more people look at your internet information than look at a postcard when you write it. People tend to forget that. The data are used for quite legal purposes.

The Earl of Northesk: My Lords, can the Minister explain how the Home Office advice to Phorm found its way onto the cryptome.org website? More broadly, the Minister referred to IMP: can he explain what the interaction between IMP and the SCOPE programme will be?

Lord West of Spithead: My Lords, as I said, I do not want to go down the IMP route at the moment. We are in the very early days of deciding what we want to do and where we are going and it would be imprudent of me to step into that debate at the moment.

Baroness Gardner of Parkes: My Lords, what is the division between national interest and national privacy? The net is worldwide and, therefore, our details are available worldwide. Is there a need for international discussion on these matters?

Lord West of Spithead: My Lords, perhaps I may first wish the noble Baroness a happy birthday. I go back to what I said. A lot of information is available to the internet service providers through headers, URLs and so on. There is no doubt that the driver for Phorm is the cut-throat market. Providers are finding it difficult to make the profit margins they want and wish to charge advertisers more. They can do this by promising that they will target precise adverts to people. That is the driver to it. There are concerns about individual privacy and so on. The noble Baroness is right: it is a worldwide system. Internet service providers have access to such details, but they have to put safety measures in place; and that is what the ICO is meant to ensure happens.

Criminal Records Bureau

Lord Marlesford: asked Her Majesty's Government:
	What action they are taking to ensure that the Criminal Records Bureau gives accurate information to those referred to it.

Lord West of Spithead: My Lords, the quality control procedures at the Criminal Records Bureau are geared to achieving the highest level of accuracy. The CRB carries out a post-disclosure accuracy check, which analyses all aspects of the disclosure application and its issue. This is based on a statistical sample of disclosure applications, from which it can be ascertained that the accuracy rate for 2007-08 is 99.98 per cent.

Lord Marlesford: My Lords, I thank the Minister for that Answer, but I am afraid that it does not accord with public perception. The much vaunted system of Criminal Records Bureau checks seems to have descended into farce and chaos. Will he at least ensure that, where there are allegations that a criminal record has been incorrectly attributed to someone, the appeal is determined within 14 days rather than the nearly three months that it takes at present?

Lord West of Spithead: My Lords, I do not agree with that characterisation of the CRB, which has been hugely successful. Obviously our foremost priority is to help to protect children and vulnerable adults by assisting organisations in doing these checks. We understand all the difficulties and the effect that they can have on people but, over the past 12 months, 3.4 million record checks have been carried out, of which 680 were slightly wrong. There is a clear method for resolving disputes. Compared with the old system, where no one knew what was being said about them, one of the benefits of the new system is that people who had been refused jobs for years were suddenly able to find out, because they had sight of their record, the reason why they were being refused. They were able to challenge it and, on a couple of occasions, they have been able to resolve it. This has been a good move. On timescales, we would like to do better. I think that we are down to 21 days now rather than the figure that was quoted, but obviously we would like to make it less. Overall, however, what has been achieved has been very impressive.

Lord Ramsbotham: My Lords, the Minister mentioned timing. I am sure that nobody would dispute the need for accuracy in this matter, but one of the unfortunate by-products is that a large number of volunteers who wish to be involved in work with children find that inordinate delays in the process prevent them from coming forward for the work. That must be of considerable concern to the organisations that need those people. What steps are being taken to speed up the process, particularly in an area where there is such a demand for the work?

Lord West of Spithead: My Lords, the noble Lord raises an important point. What is good is that we do this with no charge, as it is important to encourage and help people going voluntarily into a number of areas, such as the cadet forces. I do not have detailed answers on timescales and problems. I know that one of the problems with getting volunteers into this area is that some of them feel that the checks that are made on them are rather more than they feel that they should have when they are volunteering. That is a difficult issue, but we have to conduct these checks. I will get back to the noble Lord in writing on the specifics of timings and any details of exactly what we are doing on that.

Baroness Miller of Chilthorne Domer: My Lords, there is a vast variation between police forces in the time that they take to get back to the CRB with the data required. The CRB is supposed to be helping those forces that are not meeting the target times. Does the Minister think that that help is sufficient?

Lord West of Spithead: My Lords, the noble Baroness is right. I think that the answer is probably yes. Of course there is a variation between standard disclosure and enhanced disclosure. For enhanced disclosure, where somebody is going to have personal one-on-one contact with a child or with someone who is vulnerable, we go into more detailed information with local police forces. That clearly takes longer, so the time does vary between cases.

Baroness Carnegy of Lour: My Lords, does the noble Lord realise that it is not only the cadet forces that are affected? He mentioned them because he knows about them, but many thousands of young people are not able to join the guide and scout movement because leaders are simply not prepared to be put through the mill in this respect. People are extremely worried about this and the whole thing is completely out of proportion.

Lord West of Spithead: My Lords, I understand what the noble Baroness is saying. I referred to the cadet forces because I know about them. I have dealt with a lot of volunteers in these areas and I understand that sometimes they can feel a bit offended that they are being checked so carefully, but it is incumbent on us to make sure. We cannot put volunteers in these positions if there is a risk of them being a danger to people. It is difficult, but we have to do it. I understand from both sides what the issue is. We have some remarkably good people who are willing to give up their time. I understand how they feel but, my goodness, we have to be sure.

Viscount Bridgeman: My Lords, following my noble friend's question, are the Government fully aware of the real crisis in the voluntary sector, where many people, particularly those volunteering, are refusing to undertake any work with children because of the onerous and time-consuming need for a CRB check?

Lord West of Spithead: My Lords, I had hoped that I had covered that. The answer is yes and it is something that we will have to work at. Often one does not give enough credit to the people who give up time. I declare an interest in that I am involved with vocational qualifications for cadets and instructors. We are able to give degrees through this system to instructors, which encourages them and shows that we value them. I believe that what they do is crucial for our society. It is one area that helps in so many ways to change how people behave, particularly youngsters.

Lord Tebbit: My Lords, can the Minister assure us that all the information held by the CRB is held exclusively under British jurisdiction and subject to British criminal law?

Lord West of Spithead: My Lords, I am pretty certain that I can confirm that, but I will make absolutely certain and write to the noble Lord. He touches on an interesting area: getting details and information about people in these areas who are not British. We are in a lot of negotiations at the moment to ensure that we can get the same accurate coverage as we have of British people.

Lord McNally: My Lords, does the Minister have any concerns about reports that the full recommendations of the Soham inquiry on the exchange of information have not been implemented?

Lord West of Spithead: My Lords, I am afraid that I do not know the details of that. I will write to the noble Lord, if I may.

Crime: Knives

Lord Maginnis of Drumglass: asked Her Majesty's Government:
	What plans they have to bring the perpetrators of knife crime face to face with their victims, as announced by the Secretary of State for Home Affairs recently; and how their plans are to be achieved.

Lord West of Spithead: My Lords, for the past few months, we have been developing knife-referral schemes that will enable young people caught in the possession of knives to face up to the consequences of their actions. Schemes could include weapons awareness workshops, where information is given on what happens when someone is stabbed and the consequences for them, their families, the victim and the community are brought home.

Lord Maginnis of Drumglass: My Lords, I am grateful to the Minister, but do the Government recognise that knee-jerk reactions to serious issues are not helpful? Will the Minister reassure us that even the Home Secretary's adjusted and diluted position on this matter will not entail doctors' valuable time being used to give pep talks to knife thugs? Does he accept that knife violence is a role model problem that correlates directly with the grandeur of drug barons and their ruthless henchmen on estates and in our prisons? Will the Government consider whether it is time for these drug barons to be isolated and put in a special prison, where their ability to corrupt other young people is not so great?

Lord West of Spithead: My Lords, the noble Lord is absolutely right that one should not have just knee-jerk reactions. That was why I pointed out in my first Answer that this has been developing for some months. On 5 June, the Prime Minister stated that anyone over the age of 16 caught in possession of a knife could expect to be prosecuted on the first offence. We also announced the eight areas in which we will do particular programme work. Interestingly, according to the crime statistics today, 66 per cent of knife incidents happen in those eight areas. We have produced a whole raft of measures with the Youth Justice Board to find ways of resolving these issues. It is no good just banging these people up all the time. That does not help, although it must be there as one of the things that can be done.
	The noble Lord touched on a few things such as drugs. This issue goes far wider than just carrying knives. It is a much greater issue, and we have to tackle every aspect of it.

Earl Ferrers: My Lords, I did not gather from the Minister's first Answer whether he was saying that the Government intend to allow people who have committed attacks to visit in hospital the people whom they attacked. If they do intend to do that, does he think that the people will like meeting the people who have stabbed them, and might the nurses also enjoy meeting those kinds of people in hospital?

Lord West of Spithead: My Lords, the intention has never been to trail in people to see some poor chap, whom they have attacked with a knife, lying in a bed surrounded by his family. This got distorted somehow over the weekend. It is not something that we would do. It would be extremely counterproductive and might lead to rather more violence. It would not be a good thing to do. However, in certain targeted ways, there is sometimes merit—depending on the person involved; let us say that he is under 16 and has not actually used the weapon—in the person being able to talk to people who are experts on these things so that he can see what the impact is when a knife is used. There is a benefit in that in some cases. It is part of a whole package of measures. One noble Baroness asked why we did not put them in a mortuary and padlock them to the body overnight. That is probably more than we need to do, but we need to consider all possibilities, some of which may fade away and some of which will be of great use.

Baroness Miller of Chilthorne Domer: My Lords, the Minister talks about criminals meeting their victims, which of course is what restorative justice is about, but does he realise how much frustration there is in the police forces that are successfully using the scheme to turnaround criminals' minds? As restorative justice currently does not count as a sanctioned detection method, those forces' performance against their targets looks poorer than it is, even though they are implementing such a good scheme.

Lord West of Spithead: My Lords, the noble Baroness raises a good point. I will not give more of an answer now because there will be a Statement later on the policing Green Paper. The House will see that the issue is touched on there.

The Lord Bishop of Exeter: My Lords, is the Minister aware of the report, Who is My Neighbour?, which was recently published by Churches Together in England? Addressing the issue of knife and other violent crime, it emphasises that what is really needed are long-term strategic partnerships between churches, community groups, the police, criminal justice partners and local authorities. How will the range of initiatives to which the Minister referred be truly integrated into such a long-term strategic approach to this very difficult problem?

Lord West of Spithead: My Lords, the right reverend Prelate is absolutely right: it needs to involve all of those. I cannot easily give an answer on exactly how it will happen, but we are undoubtedly putting in place a raft of measures that ranges, as I say, from putting people in prison, to using many more search wands and search arches at places such as Streatham station—where they suddenly appear and people are asked to walk through—to applying various so-called softer measures that have the same impact. This has to involve all the groups that the right reverend Prelate talked about, and although I cannot easily say exactly how that will be done, it is the intention. This is a long-term programme and will take time, but we have been thinking and working on it for months. The first announcement was on 5 June. There may have seemed to be some knee-jerk reactions this weekend—I do not like knee-jerk reactions—but the next phase has clearly been on the board, and these things will be done as well.

Powers of Entry etc. Bill [HL]

Read a third time, and passed, and sent to the Commons.

Housing and Regeneration Bill

Baroness Royall of Blaisdon: My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Housing and Regeneration Bill, have consented to place their Prerogative and Interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

Read a third time.

Baroness Andrews: moved Amendment No. 1:
	Clause 2, page 2, line 8, at end insert—
	""good design" includes design which has due regard to the needs of elderly persons and disabled persons,"

Baroness Andrews: My Lords, on Report the noble Lord, Lord Dixon-Smith, spoke to an amendment to include in the Bill a duty on the Homes and Communities Agency to be aware of accessible housing. There was support for this across the House. I certainly supported it, and it was obvious that the House was united on this important matter, so I am delighted to bring this amendment forward. I agree with the noble Lord, Lord Dixon-Smith—and, indeed, my noble friend Lord Howarth, who has played a sterling role in this—that accessibility is a subset of good design. We have tabled an amendment to make my understanding explicit in the Bill.
	The noble Lord, Lord Best, also added his support to the amendment and he certainly influenced me when he said:
	"I had not quite appreciated that the Homes and Communities Agency may find itself under pressure, if not to renege on the progress we have made so far, not to make rapid progress to the final stages of incorporating all the lifetime home standards into new developments".
	He went on to say:
	"Strengthening the arm of the Homes and Communities Agency to resist any diminution in the existing strength of feeling for greater accessibility would be of great significance".—[Official Report, 7/7/08; col. 544.]
	I agree with the noble Lord, particularly since, as we have observed many times in this House, we are living in a rapidly ageing society but one that has higher aspirations and is looking for better standards of living and accommodation. So I hope that by giving the HCA an object of contributing to the achievement of "good design", and now making it explicit in the Bill that good design includes design that,
	"has due regard to the needs of elderly persons and disabled persons",
	I am indeed strengthening its arm against any such pressure.
	This amendment seeks to emphasise the imperative for the HCA to consider the needs of older people and disabled people when acting in support of its fourth object, which is to contribute to sustainable development and good design across all developments, whether residential, industrial or infrastructure projects. Although the amendment refers specifically only to the needs of older and disabled people, I am sure that by catering for the needs of these groups, everyone will benefit. We will be looking to the sorts of design that will enable, for example, young families to enjoy easier access with their buggies, and will aid those with short-term health conditions. The whole community will benefit. I am grateful to the noble Lord for his original amendment and I hope that he will accept that we have responded in a better way than simply adding the word "accessible" to the Bill. I beg to move.

Lord Dixon-Smith: My Lords, I am immensely grateful to the noble Baroness. We have argued this case gently for a long time. It affects a particular sector of the community that is never out of mind but is sometimes not sufficiently focused on. Over time this provision will bring relief to all sorts of families. As the noble Baroness said, one occasionally has temporary periods of incapacity after, say, major surgery or an accident. It is not just for the elderly, whom we are all becoming, and it will improve the utility of our homes across the whole spectrum of provision for the community. This is a generous concession by the Government for which, again, I am grateful.

Lord Howarth of Newport: My Lords, I, too, appreciate my noble friend's willingness to table this amendment in response to the excellent earlier amendment moved by the noble Lord, Lord Dixon-Smith, and supported so extensively across the House. After her early reservations in Committee, which were understandable enough, my noble friend has taken to embroidering Clause 2 with enthusiasm. I think that all of us who have been engaged in these debates greatly appreciated the latest of her letters, sent on 15 July. She is without a doubt my favourite correspondent. She brought us much good news about how the Government intend to ensure that good design genuinely is promoted by the Homes and Communities Agency and by the Government themselves in their broader strategy. She responded very constructively and helpfully to that tiresome but, I hope, pertinent list of questions that I put to her when welcoming the amendment to Clause 2(1)(d). In her letter she said that that amendment had strengthened the legislative framework, and this new amendment would strengthen it further. She also said:
	"Having put the framework in place, we must now ensure that the policy is effectively implemented".
	She went on to say that she would be looking to local planning authorities to assist the Government and the HCA in this strategy, which brings us again to the question of skills. I am pleased to be informed by her about CABE's programme to train officers of local planning authorities in the Building for Life methodology. It is also important that the Government, along with CABE, should pursue energetically making design review available in all the regions of the country—I understand that there are two regions where it is not yet available—and ensuring that it is of a high standard and works well.
	This amendment, which addresses the needs of the elderly so usefully, encourages us to think that the Government will indeed achieve their targets of ensuring that publicly funded housing matches lifetime home standards by 2011, and that they are serious about the target to ensure that those standards are attained with new developments in the private housing market by 2013. However, that will undoubtedly be much more difficult. I was pleased that the Minister insisted, in her letter, that she would expect the HCA to use its leverage on the private and public sectors. How will the issue of minimum space standards, which some of the relevant agencies and professional bodies are examining, intertwine with the question of achieving lifetime home standards?
	Will the Minister also comment on building regulations? In her letter, she mentioned that the current review of those is focused on reducing burdens and costs on businesses. That is, indeed, a good thing: we do not want businesses to be faced with any unnecessary burdens and costs, but in building homes we also need to be focused on the needs of those who will dwell in them. Will she confirm that that review is intended to ensure that building regulations themselves support good design?
	Where the needs of disabled people are concerned, ensuring that new build matches the best design standards is one thing; ensuring that we are able to refurbish or adapt existing homes to make their design appropriate for disabled people is much more difficult. The Minister has told us how the requirement on local authorities to provide match funding of 40 per cent for disabled facilities grants has been relaxed, and expressed optimism that local authorities would none the less continue to prioritise adaptation of homes in their communities. She argued that they would, rationally, realise that they would be saving costs on social services budgets and other budgets. Yet we cannot always be entirely confident either that local authorities will act rationally and far-sightedly or that they will, by any means, have the resources to do all that a rational and far-sighted authority would want. Will she assure us again that she will be invigilating the attitude and progress made by local authorities on adapting homes for disabled people?
	Disabled facilities grants are, of course, only part of the story, as the Minister's letter reminded us. Will she ensure that an adequate share of the £1 billion in the regional housing pot is indeed made available for adaptations, and move to clarify the respective responsibilities for disabled facilities grants of housing associations and local authorities? I ask my litany of questions again only because it is extremely important—and I know that the Minister agrees with me here—that we push these good intentions through into a really worthwhile, practical reality. I have no doubt whatsoever that my noble friend is determined that we should.

Lord Best: My Lords, I add further thanks to the Minister for this important amendment. I hope that it means that the Homes and Communities Agency will be able to lend its support not just to hastening us towards the day when the lifetime home standards of accessibility and adaptability can be applied to all private homes as well as to housing association homes, but that that powerful HCA may be able to play its part in ensuring that building regulations are actually enforced as well as simply being amended to good effect. I greatly welcome and appreciate this amendment.

Baroness Andrews: My Lords, I am glad that noble Lords think we have achieved so much of our shared objective. It is a credit to the House that we have continued on this issue, and I think we have got it right.
	In response to the detailed questions from the noble Lord, I am afraid that our correspondence is not yet over. Space standards are a complex issue; he will understand that. The ebb and flow of space standards and regulation go back over many years, and that is not something I can address at the Dispatch Box. I will update him in a letter on how we are thinking about it with regard to all these other things.
	We have to strike a balance between simplifying building regulations—making them easier to enforce, frankly—and updating them. With regard to lifetime homes we are working with a team—a BRAC review, in fact—on considering building regulations and how they might accommodate different changes. The noble Lord is quite right when he talks about our ambition that all housing should meet lifetime homes standards by 2013. That is assisted by the changes we have made in the Bill.
	On the noble Lord's specific questions about the disabled facilities grant, I think removing the 40:60 split is a positive move because it will give extra flexibility to local authorities to borrow across funding and policy boundaries. It is a mandatory grant. I have worked with local authorities; I go out sometimes with the DFG teams to see how these adaptations are being designed and implemented, and I know the seriousness with which those local authorities look at the need for DFG. They will make good use of that flexibility.
	We will be vigilant in ensuring that we secure, in a tight spending round, a significant increase for the disabled facilities grant. In our ageing strategy we made it clear that we are investing £35 million in a handyman service to ensure that the rapid repairs service, which is offered for people with disabilities and elderly people particularly, reaches more people to a higher standard and is more effective. It is one of the best things we do to help keep people independent in their own homes. I assure the noble Lord of my commitment to that.
	All that will be assisted by our debates. When it comes to the regional housing pot, we advise the regions that they must care for these particular priorities of vulnerable people.

On Question, amendment agreed to.

Baroness Andrews: moved Amendment No. 2:
	Clause 2, page 2, line 34, leave out "section" and insert "sections 19(4A) (financial assistance), 44 (local government involvement) and"

Baroness Andrews: My Lords, this group of amendments covers a number of different issues. I will start with Amendment No. 2 because I hope it will bring particular joy—I put it as highly as that—to the noble Lord, Lord Dixon-Smith, who was anxious that, having achieved the serious ambition to flag up the partnership, the principle and the psychology of a relationship with local authorities, we should put it in a place in the Bill where everyone would see it. Unfortunately, because of the logic of the architecture, it is stuck at Clause 44. However, the creativity of my officials knows no bounds, and they came up with a linking mechanism: Amendment No. 2 amends Clause 2, which will draw attention to Clause 44—so it is right at the front of the Bill. Any reader of the Bill will understand that the clauses that are mentioned, including Clause 44, relate to the objects of the agency and give them added prominence.
	The amendment also draws attention to new subsection (4)(a) to Clause 19, concerning financial assistance. We shall discuss that amendment in more depth shortly. A reference to that appears here, as a new subsection could modify the objects of the agency in certain limited circumstances relating to the provision of financial assistance.
	Although there are more than five amendments here, they cover five separate issues that were raised by the noble Baroness, Lady Hamwee, to which we have given further consideration. On the first set of issues, I still dispute the noble Baroness's assertion that the Secretary of State's powers to designate an area and confer planning functions upon it are now centre stage in the Government's proposals for the HCA. We have had many debates about the relative prominence of the designation powers. They are no more central to our plans for the HCA than they were for English Partnerships, and the noble Baroness herself described them as being there in the background for that organisation. However, I have accepted her reasoning that any situation in which such powers are likely to be used will be capable of being analysed, broken down, defined and articulated, and their relative purpose and functions and the kinds of development could and would be spelt out in a designation order. I have tabled Amendments Nos. 3 to 9 to reflect that.
	Amendments Nos. 3 to 7 restrict the ability of the Secretary of State to determine that the HCA should be the local planning authority for all permitted purposes under the Act, for all kinds of development, and in respect of all relevant functions. The amendments restrict the Secretary of State from making the blanket statement that all should apply.
	It would still be open to the Secretary of State to provide that, for example, the HCA should be the local planning authority for all permitted purposes, but she could do so only by an explicit reference to each permitted purpose. The changes made at Report ensure that these are properly consulted on—that is in the Bill—and that the Secretary of State's thinking is clear and understood for each case. I am content with that because the noble Baroness persuaded me—she is very persuasive—that this is a useful provision. It may make the act of designating an area somewhat more complex, but we have repeatedly said that this will be an exceptional occurrence. Much debate has focused on the ability to confer plan-making powers on the HCA. This amendment ensures that, should we ever propose to do so, full and fair consideration will be given to each of the powers transferred to the HCA.
	As regards the second issue, Amendments Nos. 8 and 9 also respond to the noble Baroness's concerns. Amendment No. 8 provides that where the HCA has powers and functions conferred on it in relation to permitted purposes and kinds of development, enactments relating to local planning authorities and functions will apply to it. The amendment will remove the power to disapply any enactment. Amendment No. 9 removes the ability of the Secretary of State to amend definitions of "planning related provisions" or "relevant functions" in relation to the HCA.
	In respect of Amendments Nos. 8 and 9, on Report the noble Baroness argued that Sections 14(6) and 14(8) were a step too far in relation to recognising the unusual circumstances of the HCA becoming a planning authority. She stated that applying enactments and modifying them to reflect particular circumstances might be acceptable, but that disapplying them was of a different order and therefore excessive, and that any consequential amendments should be made by the appropriate primary legislative vehicle. On reflection, we think that making these amendments will be compatible with our overall premise that the HCA as a planning authority should not be especially advantaged or disadvantaged when exercising the role, so I am happy to bring them forward, and consider that they are proportionate.
	As regards the third issue, the noble Baroness, Lady Hamwee, asked whether sufficient parliamentary scrutiny would be afforded to any designation order by the negative resolution procedure. As noble Lords know, Clauses 13 and 14 in this Bill were initially modelled on the similar provisions in the Leasehold Reform, Housing and Urban Development Act. Section 170 of that Act stated that a designation order,
	"shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament".
	Because of those origins, and in the interests of consistency, we felt it was appropriate that the same parliamentary procedure should be used to make any designation orders under the powers in this Bill. However, having thought about the exceptional nature of the case if there were to be a designation order, I believe she is right that we should justify each order on those rare occasions that we make them. Therefore, Amendments Nos. 16 and 19 require any order to be made by the affirmative procedure.
	On the fourth issue, in Amendment No. 18 we have also sought to prevent any designation order from being treated as a hybrid instrument. The potential for hybridity arises from the fact that designating an area and conferring planning functions on the HCA, although of general interest, would have the potential to affect the interests of specific individuals and organisations. If a designation order were to be subject to the hybrid procedure, this could add significant delay to any designation. It is, for example, possible to petition against hybrid instruments. Accepted petitions are considered by a Select Committee. We did not want to make that additional complication. We also thought that delays would be unwarranted because we made explicit and extensive changes to the consultation procedures. Those requirements are now in the Bill. We hope that we have dealt with that.
	Finally, on Amendment No. 21, the noble Baroness spotted that this important area had not been previously covered in our legislation. It was always our intention that the HCA, when exercising functions conferred in a designation order, would be under the same requirements as any local planning authority in giving access to papers and meetings. Yet that was not provided, hence the amendment. This means that, in the event of an HCA acting as a local planning authority, its meetings would be open to the public, in the same way as for the local planning authority normally.
	I hope that the noble Baroness will feel she has made a significant difference to the Bill in these respects. I am pleased to move these amendments and think they improve the Bill. I beg to move.

Baroness Hamwee: My Lords, the noble Baroness knows that I do not like the powers going to the HCA but I know when I have got as far as I can reasonably go. I am grateful to her not just for bringing forward the amendments but also for her willingness to discuss the issues. When during the course of this Bill the noble Baroness offered meetings, she must have wondered when on earth she would get them into her diary. I daresay her private office's collective hearts sunk each time she offered that facility to Members of your Lordships' House. She has been extremely generous with her time and willingness to engage in debate. We are all grateful for that.
	I can hardly object to most of these amendments. They are in language I used at the last stage, though I would never have spotted the hybridity point. My only comment, as the noble Baroness anticipated, is on the amendment to apply the arrangements for local government access to information and meetings. When I moved an amendment that was one or two lines rather than two pages I said I hoped it was a probing amendment. I am mildly shocked that it took a noble Lord on the Opposition Benches to point this out but never mind—that is what we are here for. We now have two pages making it perfectly clear that the HCA has got to live up to those standards. Again, let me express my thanks.

Lord Dixon-Smith: My Lords, I, too, thank the noble Baroness. I congratulate her on her ingenuity in making the concession in such a way that she has not been forced to concede the point—if I can put it that way. She has maintained the architecture of the Bill which is apparently important to some but has generously allowed us to have the recognition we thought important that local government should be recognised from the start of the Bill.
	I congratulate the noble Baroness, Lady Hamwee, on adding better clarity and certainty to Clause 13 through her pressure for amendments. This whole section of the Bill is now much better than it was when it first arrived with us. I am most grateful.

On Question, amendment agreed to.
	Clause 13 [Power of Secretary of State to make designation orders]:

Baroness Andrews: moved Amendments Nos. 3 and 4:
	Clause 13, page 5, line 21, leave out "for all permitted purposes or"
	Clause 13, page 5, line 23, leave out "all kinds of development or"
	On Question, amendments agreed to.
	Clause 14 [Contents of designation orders]:

Baroness Andrews: moved Amendments Nos. 5 to 9:
	Clause 14, page 6, line 37, leave out "for all permitted purposes or"
	Clause 14, page 6, line 38, leave out "all kinds of development or"
	Clause 14, page 6, line 44, leave out "all relevant functions, or"
	Clause 14, page 7, line 13, leave out paragraph (c)
	Clause 14, page 7, line 32, leave out subsection (8)
	On Question, amendments agreed to.
	Clause 19 [Financial assistance]:

Lord Bassam of Brighton: moved Amendment No. 10:
	Clause 19, page 10, line 35, at end insert—
	"(4A) The objects of the HCA are not to be read as preventing the HCA from exercising functions in relation to financial assistance (whether under this section or otherwise) which—
	(a) are transferred to the HCA from the Housing Corporation by virtue of this Act, or(b) would supersede functions of the Housing Corporation, in ways corresponding to those in which the Housing Corporation could have exercised its functions."

Lord Bassam of Brighton: My Lords, these amendments, which are largely minor and technical, relate, in essence, to Schedule 5 to the Housing Act 1985. They will ensure that financial assistance to the HCA given under Clause 19 will not cause the right to buy to arise in respect of any property that it owns.
	Amendment No. 25 is extremely minor. Paragraph 10(3) of Schedule 9 repeals Section 10(2)(e) of the Housing Associations Act 1985. That section deals with exceptions to the requirement on unregistered housing associations to obtain the Housing Corporation's consent—or the consent of equivalent authorities in Scotland and Wales—to dispose of grant-aided land.
	The amendments make it clear that in certain limited circumstances, the Homes and Communities Agency will not be prevented from exercising certain functions in relation to financial assistance that have either been inherited from the Housing Corporation or that would be superseding Housing Corporation functions.
	Amendments Nos. 10 and 12 will ensure that the HCA deals with a limited but important set of circumstances relating to Welsh tenants of English registered social landlords. Certain elements of housing legislation follow the location of the registered landlord rather than the property and, with the objects of the HCA related firmly to England, there are a few places where this can cause cross-boundary difficulties.
	As an example, Section 450A of the Housing Act 1985 provides that where a tenant of a registered social landlord has exercised the right to buy, they have a right to a loan in respect of service charges. Currently, this means that the Housing Corporation would have a duty to give a loan to a Welsh tenant of an RSL registered in England. Logically, the position after this Bill becomes an Act would be that the duty to provide a loan will pass to the HCA. However, the HCA's objects are strictly limited to England and to the needs of people living in England. Giving such a loan might therefore require the agency to act outside of its objects.
	These are rare occurrences—there have been only 20 or so loans in both England and Wales combined in the past 16 years—and we do not expect this provision to have any great effect. However, we do not want to remove rights that tenants currently enjoy, particularly in times when loans may be becoming increasingly difficult to obtain. These amendments will ensure that in some very rare cross-boundary cases, the HCA will be able to act to assist Welsh tenants of English RSLs.
	I turn to perhaps the more important amendment in this group, Amendment No. 11. This is a direct response to the points made by the noble Baroness, Lady Hamwee, in Grand Committee and at Report about Clause 30, which relates to the HCA's ability to provide community services. She rightly raised concerns about the ambiguity of some of the language in this clause. Our amendment will delete the "list" of activities that caused concern and replace it with a new clause, which gives a general power to the HCA to provide such services for communities as it considers appropriate or facilitate the provision of those services. This is largely based on an excellent suggestion put forward by the noble Baroness in an amendment at Report.
	I now turn to Amendments Nos. 23 and 24, which are minor and technical amendments to Schedule 11 and which deal with tolerated trespassers. They amend the definition of "commencement date" in paragraphs 14 and 25. The effect is to exclude from the definition the order-making powers in Part 2 of Schedule 11. These amendments are necessary to allow for the order-making powers to be exercised before the main tolerated trespasser provisions in Schedule 11 are brought into force.
	There is one important instance where it will be necessary to do this. The main provisions in Part 2 restore tenancies on commencement to all tolerated trespassers where the landlord has not changed since they became tolerated. On Report, we introduced an order-making power that allows us to restore tenancies in the same way to those tolerated trespassers whose landlord has changed. This will be done by secondary legislation, rather than by the Bill, since we propose to consult on the issue before final decisions are made. However, our intention is that the secondary legislation would come into force at the same time as commencement of the tolerated trespasser provisions in the Bill. To do otherwise would leave a period when there was only one class of tolerated trespassers. The House will accept that this would be unsatisfactory and unfair. We therefore need to exercise the order-making power before the rest of the provisions come into force. This amendment ensures that we can do that.
	Finally, I look in more detail at Amendments Nos. 22 and 25, which are very minor. Amendment No. 22 amends Schedule 5 to the Housing Act 1985. It ensures that financial assistance to a housing association given under Clause 19 of the Bill will not cause the right to buy to arise in respect of property it owns. Amendment No. 25 is an extremely minor amendment. Noble Lords may be aware that Schedule 9(10)(3) already provides for the repeal of Section 10(2)(e) of the Housing Associations Act 1985. This section of the Act deals with exceptions to the requirement for unregistered housing associations to obtain the Housing Corporation's consent to dispose of grant-aided land. Amendment No. 25 merely adds the reference to Schedule 16, which lists all the repeals of existing legislation that are made by this Bill.
	I hope that these amendments will find your Lordships' favour, and in particular the favour of the noble Baroness, Lady Hamwee, who I think has much to be delighted with. I beg to move.

Baroness Hamwee: My Lords, the Minister writes—in officials' language, I expect—a very long letter, in the middle of which he says that if noble Lords can find a different way of expressing it, the Government will be very interested to hear it. Well, I could not resist the challenge and I am grateful for this amendment.

On Question, amendment agreed to.
	Clause 30 [Community services]:

Lord Bassam of Brighton: moved Amendment No. 11:
	Clause 30, page 13, line 36, leave out from "may" to end of line 15 on page 14 and insert "provide such services for communities as it considers appropriate or facilitate the provision of such services"
	On Question, amendment agreed to.
	Clause 58 [Index of defined expressions: Part 1]:

Lord Bassam of Brighton: moved Amendment No. 12:
	Clause 58, page 28, line 28, column 2, after "2" insert ", 19(4A)"
	On Question, amendment agreed to.
	Clause 79 [English bodies]:

Lord Bassam of Brighton: moved Amendment No. 13:
	Clause 79, page 38, line 13, after "England," insert—
	"(ca) a community land trust which owns land in England,"

Lord Bassam of Brighton: My Lords, Amendments Nos. 13 and 14 are an important move forward in defining community land trusts as English bodies in Part 2 of the Bill. I am sure that later generations of students of Hansardwill be able to decipher what that means with ease. However, to assist them, I will take us through the story.
	The Government have been clear from the outset that we are committed to helping the development of community land trusts that are well managed and financially robust. We have supported 14 pilot projects across the country through the Housing Corporation, which has also offered funding to community land trusts to deliver affordable housing for both sale and rent. In April, we also committed to consulting on how barriers to the development of community land trusts could be removed. At that stage, the intention was to consult on whether there should be a legal definition of "community land trusts". However, in view of the concerns raised by Members of your Lordships' House, and the support for taking advantage of this opportunity, we have brought forward this amendment to give a definition of community land trusts. It is accepted by the community land trust movement that a legal definition would bring clarity and certainty to stakeholders and partners about the nature of the CLT sector.
	In drafting the amendment, we have worked closely with the community land trust movement. We have gone for a broad definition, which captures the aims and distinctive characteristics of the community land trust sector. In particular, we have tried to ensure that the definition is robust enough to ensure that community-led projects benefit the wider community in the community land trust's area.
	The definition does not of itself bring access to funding or support, nor does it set in stone government policy about how this sector can best develop or about the framework within which that should happen. As I said last week, we would have preferred to wait until after our planned consultation this year to give all stakeholders the opportunity to contribute to the debate, including on some of these wider issues.
	However, in taking forward the CLT debate, we will want to consider some important questions, such as what the criteria for financial support might be and how to maximise the chances of the development of a viable and well managed sector. Another factor in the debate is that the regulator will need to consider the criteria for the registration of community land trusts. We will also wish to consider the role that the trusts might play in both the urban and rural contexts and how perpetuity of community benefit can be ensured for the benefit of future generations. There is still much work to be done.
	We have a consensus that community land trusts offer potential for communities to put their weight and energy behind housing development. In Committee and on Report, we heard from noble Lords who were keen to keep the momentum of support moving along. I hope that we can draw a line under where we have got to at present and that noble Lords will continue to support the Government in their efforts to transform the innovative ideas and exciting prospects and opportunities of the community land trust movement into practical results. I look forward to support for the amendment. I beg to move.

Lord Graham of Edmonton: My Lords, I rise with deep gratitude to my noble friend Lady Andrews, and especially to her advisers, for having listened, reflected and produced an answer to the basic issue, which was the need for a definition. That gratitude is unalloyed; it is clear and I am very grateful indeed. The Minister has demonstrated over recent weeks that she listens carefully and that, when there is a proposition that needs her reflection and advice, she takes it away. Today, we have the product of that. I warmly congratulate her and her colleagues.
	As with everything else, there is a "but", an "if" and an "if only". I understand that the amendments are as far as the department and the Minister can go. I echo the noble Baroness, Lady Hamwee, who said some minutes ago that she knew how far she could go and that this was it. I accept the same; there is no question of muddying the water. We have gone as far as we can go.
	However, there has been intense discussion, particularly about defining who should be members of the trust. Amendment No. 14 defines a local community as,
	"the individuals who live or work, or want to live or work, in a specific area".
	There is no objection to that, but everyone understands that a community is more than individuals; a range of other bodies is part of the community. I want the Minister to reflect on that and, I hope, to say that she and her advisers share my understanding. When amendments refer to "members" and "individuals", there may well be a legal reason for those words—I do not quibble with that—but how wide should the interpretation of those terms be? For instance, a community includes voluntary organisations, parish councils, local councils, civic society organisations, schools, local health service organisations, key local employers and local shops. I understand the difficulty in putting something in the Bill that is all-embracing, so I seek an understanding that, when a trust is established, the beneficiaries from the product of the trust's work can include the examples that I have given. I simply want an understanding.
	Perhaps I may help the Minister with the following illustration as a practical example. The local community land trust for one of the 14 national pilot projects supported by the Government is on the former Cashes Green Hospital site in David Drew's constituency in Stroud, Gloucestershire. He is a personal friend and is sponsored by the Co-operative movement, in which I declare an interest. The CLT would like to encourage a local GP to provide health services to the village of Cashes Green by using some of its land to facilitate the provision of a health centre. Although it is part of the National Health Service, a GP practice is technically a privately run business owned by the doctors who are partners in the practice. Another local community land trust might want to provide premises for a local shop that is also run as a commercial enterprise. Such uses of a CLT's assets benefit,
	"individuals who live or work, or want to live or work, in a specified area",
	but that is an indirect, rather than a direct, benefit.
	I am not nitpicking and I am not being too pedantic, but such provision would enormously put the icing on the cake of what we have achieved. The main benefit of a CLT, as the Minister knows, is,
	"furthering the social, economic and environmental interests of a local community",
	through working with or benefiting organisations,
	"by acquiring and managing land and other assets".
	It would be satisfactory if my noble friend were able to say—I am not putting words into his mouth—that his understanding is that the bodies that I have listed could be embraced by that definition.
	I take this last opportunity to thank Members of all parties around the House. The Minister took on board the fact that this was not a party matter but a House matter, a housing matter and a community matter, which has been reflected in the Minister's willingness to act. I am grateful for what has been achieved and, with the possibility of clarification, I am delighted with the amendments.

Lord Bassam of Brighton: My Lords, the noble Lord is generous in his congratulations and I can tell that he is delighted with the progress that has been made. I am pleased about that. Like the noble Lord, I am a firm "co-operator" and I suppose that I should declare that interest. I see the establishment of community land trusts as an important part of that movement.
	The noble Lord seeks some clarification. It comes down to this: how can the community land trust use its assets and make use of its profits and surplus and, in doing so, how can it benefit community organisations, even if such organisations have a private interest as well? Of course local people can be members of the community land trust, but that does not mean that only local people are eligible for membership. Others may become members, which will depend very much on how the community land trust defines its own rules of governance. These rules of governance can extend to cover local organisations—those listed by my noble friend would certainly be covered. As long as there is a benefit to those individuals who are members, I do not think that there will be a difficulty with the understanding that my noble friend has. That is certainly how we envisaged it working when we came back with this definition.
	I hope that that helps my noble friend Lord Graham. It is certainly intended to. This will enable community land trusts to have that broader social community role that noble Lords have argued for in our debates. I hope that we can agree to the amendments.

Lord Graham of Edmonton: My Lords, my noble friend has been enormously helpful. As I sat behind him listening, he clarified that the words in the Bill envisage that there will be more than individuals as members of the trust. The actions taken by the trust will be the members' decisions. If the bodies that are members are locally based, they will be able to influence the decisions of the trust and to be beneficiaries of and subject to the trust. I am enormously grateful to my noble friend for that clarification. I do not want him to alter a word of what he said, so I shall sit down and be quiet.

On Question, amendment agreed to.

Lord Bassam of Brighton: moved Amendment No. 14:
	Clause 79, page 38, line 19, at end insert—
	"(2) In subsection (1)(ca) "community land trust" means a body corporate which satisfies the conditions below.
	(3) In those conditions "local community" means the individuals who live or work, or want to live or work, in a specified area.
	(4) Condition 1 is that the body is established for the express purpose of furthering the social, economic and environmental interests of a local community by acquiring and managing land and other assets in order—
	(a) to provide a benefit to the local community, and(b) to ensure that the assets are not sold or developed except in a manner which the trust's members think benefits the local community.
	(5) Condition 2 is that the body is established under arrangements which are expressly designed to ensure that—
	(a) any profits from its activities will be used to benefit the local community (otherwise than by being paid directly to members),(b) individuals who live or work in the specified area have the opportunity to become members of the trust (whether or not others can also become members), and(c) the members of the trust control it."
	On Question, amendment agreed to.

Baroness Andrews: moved Amendment No. 15:
	After Clause 113, insert the following new Clause—
	"Registration of local authorities
	(1) The Secretary of State may by order—
	(a) repeal section 113, or(b) amend it so as to permit the registration of specified classes of local authority.
	(2) The Secretary of State may by order require the regulator to register—
	(a) a specified local authority, or(b) a specified class of local authority.
	(3) Registration under subsection (2)—
	(a) takes effect in accordance with any provision of the order about timing or other procedural or incidental matters,(b) does not require an application for registration, and(c) may apply to a local authority whether or not it is eligible for registration by virtue of subsection (1).
	(4) If the Secretary of State thinks it necessary or desirable in connection with the registration of local authorities, the Secretary of State may by order—
	(a) provide for a provision of this Part or any other enactment not to apply in relation to registered local authorities;(b) provide for a provision of this Part or any other enactment to apply with specified modifications in relation to registered local authorities;(c) amend a provision of this Part or any other enactment.
	(5) In this section—
	(a) "local authority" means an authority or person to whom section 113 applies or has applied, and(b) "registered local authorities" means authorities or persons who are registered, registrable or to be registered as a result of an order under subsection (1) or (2) above.
	(6) Before making an order under this section the Secretary of State shall consult—
	(a) any authority or person likely to be affected by it, and(b) such other persons as the Secretary of State thinks fit."

Baroness Andrews: My Lords, I agreed on Report that we should table an enabling power to allow us to deliver the provisions necessary to support cross-domain regulation through secondary legislation. We had a wide-ranging debate on this at every stage of the Bill, and given the widespread support across the House for doing it in this way, our offer was well received. I am very pleased about that.
	As I pointed out in the debate, we need a broad power that is flexible enough to allow us to make the necessary changes to legislation. It would be extremely unfortunate, as I think everyone would agree, if we were to forgo the opportunity of a Bill in the next Session only to find that we had drafted an enabling power too tightly to allow us to proceed as we ideally would. We would very much regret that, and I believe that the House is happy with the breadth of the amendment.
	That is why we seek to introduce a power that allows the Secretary of State to amend or modify as necessary or desirable Part 2 of this Bill or any other relevant legislation so as to enable the Tenant Services Authority to regulate local authorities. I have not sensed a significant degree of concern at taking this broad approach. I trust that the enthusiastic support is such that noble Lords certainly accept that it is fit for purpose.
	In taking a broad power, our intention is that it would be used sensibly and only where there is a clear rationale for making a change in support of effective cross-domain regulation. I have already committed to offering a full public consultation on regulations made under the power, which is obviously right. The work of the Cole advisory panel has shown that much can be achieved from engaging in an open and inclusive process. Everyone around the House has paid tribute to the work of Professor Ian Cole. In our eagerness to consult in terms of ongoing dialogue and a more formal consultative process I hope that we will satisfy those noble Lords, particularly the noble Lord, Lord Dixon-Smith, who had expressed a preference for super-affirmative procedures.
	The enabling clause is fairly simple. In addition to allowing us to amend, modify or not apply any piece of legislation as required, it also allows for the registration of local authorities. It allows the Secretary of State to register, by order, a specified local authority or a class of authority. In so doing, the order may make provision about how the registration should operate; that is, the process on which we will consult as part of the wider regulations.
	Having debated the complex nature of these regulations, it is something of an anti-climax to be discussing a clause which is rather simple in its description. We can now make a welcome shift to considering the substance rather than the process of delivering a cross-domain regulator, and to doing those things that will meet the social concerns recognised by the noble Lord, Lord Best; for example, creating a coherent culture to ensure that the benefits of the Bill reach every tenant, as defined.
	This is the last group of amendments and very kind things have been said about my ability to find time in my diary for meetings. It has been a great pleasure to work with noble Lords across the House and not just a necessity. I believe that we should have an open process and debate on this Bill. It was a good Bill when we introduced it, but it is much better now, which is to the huge credit of noble Lords who have taken part. It would be invidious to single out anyone, but I have been gratified to have the authority and support of my noble friends Lady Ford and Lady Dean on my side, as well as the assiduous nagging of my noble friends Lord Howarth, Lord Graham and Lady Whitaker. They have put in sterling work, as have my noble friends Lord Filkin and Lady Jones.
	I pay tribute to the noble Lord, Lord Best, who has been a real sheepdog on the Bill and has ensured that we have made the position of the tenant very clear. He has played an excellent role, as have noble Lords on both Front Benches. The noble Viscount, Lord Eccles, has kept us up to the mark on the management of the Bill. On behalf of all noble Lords, I thank the Bill team for their extraordinary talent. They have been exceptional in their creativity as well as in their assiduous response to the will of this House, which was shown in the expert way in which they have come back with voluminous correspondence and the sensitive way in which they have interpreted what the House has wanted. With that, I hope that we can bless the Bill in its form. I beg to move.

Lord Best: My Lords, again I give deep thanks to the Minister for listening to the representations made and for bringing forward this important amendment. I also thank all colleagues on all Benches in supporting a potentially lonely Cross-Bencher who alone can do very little. I know that this amendment will be much appreciated by the organisations representing tenants and landlords, including the Local Government Association, the Chartered Institute of Housing, the National Federation of ALMOs, the Tenant Participation Advisory Service and the National Consumer Council. It means that council tenants can enjoy the same protections and support from the regulator as housing association tenants without the need for another Act of Parliament. It will prevent anomalies and complexities as tenants move between council housing and housing association homes. All will have a similar service. It will ensure that council tenants will not be treated as second-class citizens. It will also enable the new Tenant Services Authority to establish a coherent culture, as the noble Baroness has said, to recruit a board and to engage staff on the basis of certainty that 4 million, not 2 million, tenants will be covered without waiting for a new Bill.
	If the Minister could give an idea of timetabling for consultation and action in taking forward the extension of the Tenant Services Authority's role to cover council tenants, that would be appreciated. But that can await another day. I know that things will move forward as expeditiously as possible. I thank the Minister for this amendment, which I heartily support.

Noble Lords: Hear, hear.

Baroness Hamwee: My Lords, when I was fairly new in this House, Lord Longford stood back to let me go through a Division Lobby first and then apologised and said, "I am sorry, we do not do things that way now, do we?". I, too, should like to add my thanks.
	I apologise for lowering the tone, but I have a question. Under the new clause proposed in Amendment No. 15, subsection (2) allows registration of,
	"a specified local authority, or ... a specified class of local authority".
	That puzzles me. I had not anticipated that it might be necessary to differentiate between authorities. I gave the noble Baroness almost no notice of this question and I do not know whether she is able to explain why that is necessary.

Baroness Andrews: My Lords, I was grateful for the notice that I was given. We have yet to publish Professor Cole's report, but, given that it has been circulated, I am not breaking any confidences in relating that it will recommend that only those local authorities which own stock should be subject to consultation. Specifying the local authorities gives us flexibility. The clause allows us to register such a class and gives us the ability to specify a particular authority. We will of course have to consult on this, along with the way in which we propose to handle registration of local authorities, when we bring forward draft regulations.

Lord Dixon-Smith: My Lords, if I am out of order, I apologise and I hope that the House will understand. I need to add my thanks, first, to everyone in the House who has taken part in this Bill. There is no question that the Bill will leave this House in a far better state than it arrived, which is the result of the work of so many people besides ourselves. I owe thanks to all those who have briefed us. They sometimes swamp us with information, but, as a consequence of that, we are much better informed when we study these Bills and are able to bring improvements forward.
	I am particularly grateful to the noble Baroness who has been remarkably resistant to change and yet remarkably flexible at the same time, which is quite an achievement. If I have one regret, I have one only. The Bill was 32 pages longer this morning than when it arrived here. As a result of this morning's work, it is probably 35 pages longer. Those out in the field who have to study the Bill in order to work will have to dig even further and mine even longer shafts in order to receive the nuggets they need on which their work is based.

On Question, amendment agreed to.
	Clause 319 [Orders and regulations]:

Baroness Andrews: moved Amendments Nos. 16 to 20:
	Clause 319, page 149, line 41, leave out "14(8)" and insert "13"
	Clause 319, page 149, line 41, after "14(8)" insert ", (Registration of local authorities)"
	Clause 319, page 150, line 10, at end insert—
	"( ) If a draft of an instrument containing an order under section 13 would, apart from this subsection, be treated as a hybrid instrument for the purposes of the standing orders of either House of Parliament, it is to proceed in that House as if it were not a hybrid instrument."
	Clause 319, page 150, line 15, leave out "13 or"
	Clause 319, page 150, line 15, leave out second "section" and insert "sections (Registration of local authorities) and"
	On Question, amendments agreed to.
	Schedule 8 [Amendments of enactments: Part 1]:

Baroness Andrews: moved Amendments Nos. 21 and 22:
	Schedule 8, page 195, line 20, at end insert—
	"Local Government Act 1972 (c. 70)
	The Local Government Act 1972 is amended as follows.
	(1) Section 100J (application of Part 5A of the Act to new authorities, Common Council, etc.) is amended as follows.
	(2) In subsection (1) after paragraph (f) insert—
	"(g) the Homes and Communities Agency so far as it is exercising functions conferred on it in relation to a designated area by virtue of a designation order."
	(3) After subsection (2) insert—
	"(2A) In its application by virtue of subsection (1)(g) above in relation to the Homes and Communities Agency, a reference in this Part to the offices of the council (however expressed)—
	(a) is to be treated as a reference to such premises located within the designated area as the Homes and Communities Agency considers appropriate, and(b) in the application of section 100A(6)(a) above to a case where the meeting is to be held at premises other than those mentioned in paragraph (a) above, includes a reference to those other premises."
	(4) After subsection (3) insert—
	"(3ZA) In its application by virtue of subsection (1)(g) above in relation to the Homes and Communities Agency, section 100E above shall have effect as if—
	(a) in subsection (2), paragraph (c) was omitted, and(b) in subsection (3), for paragraphs (a) to (c) there were substituted—"(a) a committee established under paragraph 6(1) of Schedule 1 to the Housing and Regeneration Act 2008 for the purpose of exercising functions conferred on the Homes and Communities Agency in relation to a designated area by virtue of a designation order; or(b) a sub-committee of such a committee established under paragraph 6(2) of that Schedule to that Act for that purpose."
	(3ZB) In its application by virtue of subsection (1)(g) above in relation to the Homes and Communities Agency, section 100G(1) above shall have effect as if paragraph (a) was omitted."
	(5) After subsection (4A) insert—
	"(4B) In this section "designated area" and "designation order" have the same meanings as in Part 1 of the Housing and Regeneration Act 2008."
	In section 100K (interpretation and application of Part 5A) in the definition of "committee or sub-committee of a principal council" at the end insert "(and see section 100J(3ZA)(b) above)"."
	Schedule 8, page 199, line 29, at end insert—
	"Housing Act 1985 (c. 68)
	In Schedule 5 to the Housing Act 1985 (exceptions to the right to buy) in paragraph 3, at the end insert ", or
	section 19 of the Housing and Regeneration Act 2008 (financial assistance) which was a grant made on condition that the housing association provides social housing (and "provides social housing" has the same meaning as in Part 1 of that Act).""
	On Question, amendments agreed to.
	Schedule 11 [Possession orders relating to certain tenancies]:

Baroness Andrews: moved Amendments Nos. 23 and 24:
	Schedule 11, page 219, line 2, at end insert "for purposes other than the purposes of the Secretary of State or the Welsh Ministers making orders under Part 2 of this Schedule"
	Schedule 11, page 223, line 29, at end insert "for purposes other than the purposes of the Secretary of State or the Welsh Ministers making orders under this Part of this Schedule"
	On Question, amendments agreed to.
	Schedule 16 [Repeals and revocations]:

Baroness Andrews: moved Amendment No. 25:
	Schedule 16, page 250, line 42, column 2, at beginning insert—
	"In section 10(2), paragraph (e) and the "or" before it."
	On Question, amendment agreed to.

Baroness Andrews: My Lords, I beg to move that this Bill do now pass.
	Moved accordingly, and, on Question, Bill passed, and returned to the Commons with amendments.

Terrorism Act 2000 (Proscribed Organisations) (Amendment) (No. 2) Order 2008

Lord West of Spithead: rose to move, That the draft order laid before the House on 2 July be approved.

Lord West of Spithead: My Lords, the international terrorist threat to the United Kingdom and its interests abroad, and to our international partners, remains severe and sustained. The Government are determined to do all they can to minimise the threat, including using proscription to prevent terrorist organisations from operating in the United Kingdom by inviting support, raising funds or otherwise furthering their objectives.
	The purpose of the order, if this House and the other place so approve, is to add to the list of 45 international terrorist organisations that are already proscribed. We propose to do so by substituting the existing proscription of the Hezbollah External Security Organisation with a new listing covering its entire military wing. This is the seventh proscription order made under the Terrorism Act 2000.
	Section 3 of the Terrorism Act 2000 provides a power for the Home Secretary to proscribe an organisation if she believes it is concerned in terrorism. This is achieved by adding the organisation to Schedule 2 to the Terrorism Act 2000, which lists the proscribed terrorist organisations. The Act specifies that an organisation is concerned in terrorism if it: commits or participates in acts of terrorism; prepares for terrorism; promotes or encourages terrorism, including the unlawful glorification of terrorism; or is otherwise concerned in terrorism.
	The Home Secretary may proscribe an organisation only if she believes it is concerned in terrorism. If the test is met, she may then exercise her discretion to proscribe the organisation. When considering whether to exercise this discretion, a number of factors are taken into account, which were first announced to Parliament in 2001. They are: the nature and scale of an organisation's activities; the specific threat that it poses to the United Kingdom; the specific threat that it poses to British nationals overseas; the organisation's presence in the United Kingdom; and the need to support other members of the international community in tackling terrorism.
	Proscription is a tough but necessary power, and its effect is that the proscribed organisation is outlawed and is unable to operate in the United Kingdom. The consequence of proscription is that specific criminal offences apply in relation to a proscribed organisation. These include membership of the organisation, the provision of various forms of support, including organising or addressing a meeting, and wearing or displaying an article indicating membership of the organisation. Further criminal offences exist in relation to fundraising and various uses of money and property for the purposes of terrorism.
	Given the wide-ranging impact of proscription, the Home Secretary exercises her power to proscribe an organisation only after thoroughly reviewing all the available relevant information on it. This includes open-source material as well as intelligence material, legal advice and advice reflecting consultations across government, including with the intelligence and law enforcement agencies. Decisions on proscription are taken with great care by the Home Secretary, and it is also right that both Houses must consider the case for proscribing new organisations.
	The Hezbollah External Security Organisation, a unit of the military wing, was proscribed in 2001 because of its involvement in terrorism outside Lebanon. We now have evidence that further parts of the organisation are directly concerned in terrorism, and this is why the entire military wing, including the External Security Organisation, is specified in this order. I am sure that noble Lords will appreciate that I am limited in what I can say about the evidence in support of this belief, as much of it is intelligence material and of a sensitive nature. I can, however, say unequivocally that Hezbollah's military wing is providing active support to Shia militant groups in Iraq, including Jaish al-Mahdi (JAM), which has been responsible for attacks on both Iraqi civilians and coalition forces. This includes providing training in the use of deadly, explosively formed projectiles used in roadside bombs.
	Although I am unable to go into the detail of the evidence, I can inform noble Lords that Hezbollah's support for insurgent groups in Iraq was confirmed when coalition forces captured a senior Hezbollah operative, Ali Musa Daqduq, in Iraq on 20 March 2007. Daqduq is a Lebanese national who served for 24 years in Hezbollah. In 2005, he was directed by senior Lebanese Hezbollah military commanders to train Shia groups in Iraq. Hezbollah's military wing is also providing support to Palestinian rejectionist groups in the occupied Palestinian territories, including Hamas and Palestinian Islamic Jihad.
	The proscription of Hezbollah's military wing will contribute to making the United Kingdom a hostile environment for terrorists and their supporters. It will signal our condemnation of the support that Hezbollah provides to those who attack British and other coalition forces in Iraq, as well as Iraqi civilians. It will support our international partners in disrupting terrorist activity in the occupied Palestinian territories, and it will also send a strong message that the United Kingdom is not willing to tolerate terrorism either here or anywhere else in the world.
	Noble Lords will be aware that, alongside its military operations, Hezbollah performs a legitimate political, social and humanitarian role in Lebanon. Proscription is not targeted at, and will not affect, these legitimate activities, but it sends a clear message that we condemn Hezbollah's violence and support for terrorism. We continue to call on Hezbollah to end terrorist activity, abandon its status as an armed group and participate in the democratic process on the same terms as other Lebanese political parties.
	As a final point, I have already said that the Government recognise that proscription is a tough power that can have a wide-ranging impact. Because of this, there is an appeal mechanism in the legislation. Any organisation that is proscribed, or anyone affected by the proscription of an organisation, can apply to the Home Secretary for the organisation to be deproscribed. If this is refused, the applicant can appeal to the Proscribed Organisations Appeal Commission, POAC, a special tribunal which reviews whether the Home Secretary has properly exercised her powers to refuse to deproscribe the organisation. POAC is able to consider the sensitive material that often underpins proscription decisions, and a special advocate can be appointed to represent the interests of the applicant in closed sessions of the commission.
	Given the evidence of the military wing of Hezbollah's direct support for terrorism in Iraq and the occupied Palestinian territories, it is right that we extend the existing proscription of the External Security Organisation to cover Hezbollah's entire military wing. I commend the order to the House. I beg to move.

Moved, That the order laid before the House on 2 July be approved. 25th Report from the Joint Committee on Statutory Instruments.—(Lord West of Spithead.)

Lord Kingsland: My Lords, Part 2 of the Terrorism Act 2000 contains a procedure for proscribing organisations that the Secretary of State believes to be "concerned in terrorism". As the Minister stated, this covers any organisation which,
	"commits or participates in acts of terrorism, prepares for terrorism, promotes or encourages terrorism, or is otherwise concerned in terrorism".
	The list of proscribed organisations is set out in Schedule 2 to the Terrorism Act 2000. The Secretary of State has the power, by order, to add to, remove or amend a name on the list.
	Sections 11 and 12 of the Terrorism Act 2000 create a wide range of offences dealing with membership or professed membership of proscribed organisations, the promotion of them and meetings in support of them. Moreover, the grounds for proscription have been widened by the recent Terrorism Act 2006. Under Section 21 of that Act, organisations which "glorify" the commission or preparation of acts of terrorism can also be prescribed.
	On 2 July, the Government laid before Parliament this order seeking to proscribe the military wing of Hezbollah in its entirety, including the jihad council and all units reporting to it. If the order is approved by Parliament, it will be a criminal offence to belong to, fundraise and encourage support for the military wing of the organisation.
	The Explanatory Memorandum to the order states inter alia:
	"Hizballah is actively involved in terrorist related activities. These activities include, but are not limited to, the provision of training and logistical and financial support to terrorist groups in Iraq and Palestine. The military wing of Hizballah is involved in supporting Shia insurgent groups in Iraq to carry out attacks, including against Coalition forces".
	During Prime Minister's Questions on 2 July, the right honourable gentleman the Prime Minister told the House:
	"To help bring about more general peace in the Middle East, we have been considering what we can do. We have today laid an order before Parliament extending proscription to cover Hezbollah's entire military wing, solely on the grounds of new evidence of its involvement in terrorism in Iraq and the occupied Palestinian territories. Proscription will not affect Hezbollah's legitimate political and social wings, but we continue to call on Hezbollah to end its status as an armed group, to participate in the Lebanese democratic process, and to do so on the same terms as other political parties".—[Official Report, Commons, 2/7/08; col. 860.]
	The Government have emphasised that this order will not affect Hezbollah's political, social and humanitarian activities. Introducing the order, the Home Office Minister, the right honourable Tony McNulty, said that proscription of Hezbollah's military wing would not affect the legitimate political, social and humanitarian role Hezbollah plays in the Lebanon but would send out a clear message that the Government condemn Hezbollah's violence and support for terrorism.
	With respect to that observation, can the Minister explain how this distinction will work in practice? Can the group be simultaneously legitimate and a terrorist organisation? This suggests two entirely separate wings of Hezbollah that operate independently from each other. Is the Minister confident that this is really the case? In particular, to what extent does Sheikh Nasrallah, Hezbollah's recognised leader and in overall charge of Hezbollah's military activities, have control over Hezbollah politicians within the Lebanese Cabinet?
	Will the United Kingdom seek the proscription of Hezbollah's military wing by the European Union? Does the Minister not agree that if the United Kingdom designation is to have any real effect, it needs to be extended to the Union as a whole?
	Does the Minister not agree that this move to ban the military wing must be linked to steps to achieve the group's disarmament, without which it will remain an unacceptable threat to Israel and to the security of the region?
	What evidence does the Minister have of Hezbollah's fundraising activities in the United Kingdom, and if none, what measures are being taken to identify such activity? The Government's measure falls short of proscribing the whole organisation. Will that not increase the risk of fundraising, supposedly for political and humanitarian purposes, being diverted to Hezbollah's military activities?
	In announcing the decision to proscribe the whole military wing of Hezbollah, the Prime Minister said the move was based,
	"solely on the grounds of new evidence of its involvement in terrorism in Iraq and the occupied Palestinian territories".—[Official Report, Commons, 2/7/08; col. 860.]
	Does the reference to terrorism in Iraq include any specific threat to United Kingdom personnel?
	The proposed policy towards Hezbollah contrasts with the Government's approach towards the Tamil Tigers and the Kurdish PKK, both of which are fully proscribed. The right answer, surely, is for the order to impose a complete ban on Hezbollah in the United Kingdom; otherwise, it will continue to be able to raise funds which, and recruit members who, can then be diverted for terrorist purposes.

Lord Wallace of Saltaire: My Lords, we on these Benches support this order, although we would certainly not join with the Conservatives in supporting a complete ban on Hezbollah in the United Kingdom. We have spent many years, all of us involved in United Kingdom politics, accepting the rather artificial distinction between Sinn Fein as a political movement and the Irish Republican Army as a military operation. We recognised at the time that it was important to maintain that there was a distinction, even though that distinction was never entirely clear.
	We all accept that the threat from terrorist organisations in the United Kingdom and elsewhere is real but that, as an open and democratic country, political movements operating in and outside Britain have legitimate functions to fulfil and, furthermore, in our very diverse society, that charitable activities in the United Kingdom to support suffering in other countries are legitimate. I do much of my politics in Yorkshire and I am conscious that the issue of charitable activities to support humanitarian projects in other countries can on occasions be quite controversial. Nevertheless, we have to maintain those clear distinctions. We also recognise that one man's terrorist activity outside Britain is another person's armed resistance.
	One of the questions one has to ask about the proscription of the political wing of Hezbollah is whether this is primarily about Iraq or the Palestinian territories. As the Minister is well aware, my party has never supported the full weight of western intervention in Iraq. Armed resistance in Iraq is not always necessarily legitimate. Hezbollah is now a political actor in the Lebanon and a member of the Government—not entirely an attractive member of that Government, but we all have to deal with movements of which we disapprove. Hamas, similarly, is a very unattractive body in many ways but a necessary partner in negotiating to move away from the Israel/Palestine conflict. Many of us intensely disliked negotiating with Sinn Fein but, again, recognised that it was necessary.
	I ask the Minister how the additional criteria come in. The specific threat posed to the UK seems thin. As I understand it, Hezbollah does not intend under any circumstances to operate within the United Kingdom. We are talking about activities in the occupied Palestinian territories and in Iraq. It is probably difficult for the Minister to outline the extent of the organisation's presence in the UK, but, as I understand from the order, this is not itself a major issue. The two primary justifications among the additional criteria are: the specific threat posed to British nationals overseas—by which we mean British troops still in Iraq so long as they are there—and the need to support international partners in the fight against terrorism. Some of us wish to distinguish between the British definition of the fight against terrorism and the Bush Administration's definition of it, and are not sure that the Government should always support 100 per cent the latter. However, would the Minister confirm that the need to support international partners is one of the major motivations for this order?

Lord Alderdice: My Lords, I am somewhat puzzled by the timing of the order introduced by Her Majesty's Government. As someone who is concerned about the use of terrorism in various parts of the world, I have viewed with interest and encouragement, albeit with some impatience, the moves by Hezbollah towards the democratic process.
	Some years ago, I was asked to start meetings with Hezbollah on the development of a peace process in the Middle East and specifically how it could address the question of its weapons, which at that stage was a major international issue for it. I had a series of meetings with it at that time. There are a few requirements when dealing with weapons and the decommissioning of weapons. First, there is an alternative political process for dealing with difference and political disagreement. Secondly, those who are being invited to decommission must not feel that they are under a threat that requires them to retain their weapons. Thirdly, there should be a mechanism for them to do this.
	The great difficulty that arose in those conversations was the increasingly obvious move that led eventually to the south Lebanon war. There was no prospect of persuading people to deal with their weapons if they felt that they might be invaded, and indeed when there was clear evidence that they had been invaded. The question of dealing with the weapons has therefore had to be postponed. The question of a peace process in the Middle East is fraught and difficult. Nevertheless, there have been a number of interesting developments in the last little while, almost none of them involving the United Kingdom or the United States. I am thinking of the discussions involving Syria and Israel, assisted by Turkey; the discussions between Israel and Hamas, facilitated by Egypt; and the recent agreement, facilitated by the Germans, for Hezbollah to hand over the two IDF soldiers and, in return, for Hezbollah operatives to be returned.
	In all these situations, it is clear that negotiations are possible. Indeed, there have already been some negotiations. As I say, there has been an indication in the past few days that Israel is prepared to enter into talks with Hezbollah and with those in Hezbollah who have military responsibility, and with Hamas using the interlocutors of Egypt. It is therefore a puzzling time to send the message, whatever the legalities of the thing—other noble Lords have already questioned the clarity of the order in this regard—not so much that we are hostile to terrorism, because frankly there is nothing new there, but that we are hostile to and do not welcome the opportunity to win people over to the democratic process and encourage them in that regard, and that we want simply to appear antagonistic to them and all that they stand for.
	I am puzzled to know how a political development of that kind assists those of us who are trying to persuade people in Hezbollah that there are alternative ways of dealing with difference and political difficulty. The West in general, of which we are a part, is eager to facilitate that, but at the point at which there are moves towards discussion of these very issues, there seems on every occasion to be some kind of military or security development that sends the message that such discussion is not very welcome. That is absolutely how it is perceived. When there are talks about decommissioning weapons, next there is a war that makes that impossible, and when people start to become involved in the democratic process by being elected, in the case of Hamas and Hezbollah, the message is not, "Now we can start to engage you and persuade you to go the full way in committing yourself to democracy", but, "We have to isolate the whole community that has voted for you", because we do not particularly welcome the result of their election.
	The timing is puzzling, and I would be interested to hear the Minister say how he believes the order will facilitate the political process to persuade people to give up military force and instead follow a fully democratic path, and whether this development makes life more difficult practically, legally and politically for those of us who do not believe that there is a military solution to the difficulties in the Middle East. There is a military role, but there is no military solution to any of them. How will the order facilitate moves toward political dialogue and political exchange, and how far do Her Majesty's Government feel that a development of this kind and at this time makes a difference to terrorism and in any way facilitates political progress?

Lord Russell-Johnston: My Lords, I shall speak briefly on a different issue in which the Minister was involved. The PMOI, after a long and complicated legal process in the British courts, was cleared of being a terrorist organisation. I recall the Minister making a statement about this in this House. He, and certainly the Minister in another place, indicated that the consequence of the case would be a change of attitude in the European Union Council of Ministers. This has not happened, and I would like to know why and what attitude the British took.

Lord West of Spithead: My Lords, I thank noble Lords for this considered debate on the proposals, and I appreciate the views expressed by colleagues in this House on the wider concerns that are affected by the order. There have been some thoughtful and helpful interventions, and I will try to deal with them.
	The noble Lord, Lord Kingsland, articulated very clearly our reason for going down this route. He asked how confident one might be about differentiating between the different parts of Hezbollah, particularly in collecting money and moving it. I agree that this is extremely difficult. The police and the Charity Commission will have to look at the arrangements that cover money flowing out of the country. Generally, it is incumbent on the person who gives money to something to check exactly whom it is going to, but I accept that this is difficult. The police and the Charity Commission will have to look very carefully at this, which is not easy to do. Will we ask the EU to proscribe this? We will take this to the EU and see how that goes with the committee that reviews this.
	The noble Lord, Lord Russell-Johnston, asked why our position on the PMOI has not changed. I will touch on this in the context of the EU. The EU addressed this, but I am afraid that some of the other nations in the EU did not feel the same way as we did. Therefore, the issue is slightly in limbo at the moment and is still on the EU's list. I am not sure how this will go forward, but that is where it stands at the moment.
	The noble Lord, Lord Kingsland, talked about disarmament. We would like to link this to disarmament, but it is extremely difficult to do so. Again, we will have to see how this can be done. It is not easy, but it is extremely important that we show that we differentiate between these two things. The issues that made us change our mind and review all this have been going on for many months, and we have had to have a lot of discussions with a lot of people, sift all the intelligence and look at all the evidence. The end result was that we were very clear that this was having an impact on our troops in Iraq. There was also the issue of the Palestinian territories. The noble Lord, Lord Wallace, asked whether we could differentiate between the two. The answer is no. The threat to coalition forces, which inevitably include our own troops, is very great. We have lost 136 of our people there, and it is very important that we show that this is totally unacceptable not only so far as terrorism is concerned but unacceptable full stop. We have reached that position, which is the reason for the timing of the order.
	The noble Lord, Lord Alderdice, asked about the timing of the order. He has great experience of conflict resolution, and we all think very highly of it. He knows a lot about it, and he made some very important points. I touched on the issue of disarmament. It is absolutely true that it is almost impossible to get anyone to disarm if they feel that they will be attacked, and that is quite understandable. One has to get beyond that before anything can be done. In an ideal world, the timing, as with so many things in this area, might not be quite like this. As I said, however, there is a very real threat to our people—136 have been killed, many of them by these very clever improvised explosive devices. We know now that Hezbollah is linked to this as terrorists. We had to move on this to give a signal.
	Is this absolutely the best moment to do that? It is important to show that we understand the good things that Hezbollah is doing within Lebanon. Our ambassador in Lebanon has talked to the various people involved there. We think that it would be wonderful if Hezbollah became a proper political party. It is rather important to show that we differentiate between the two. That is why the timing might seem a little strange. I am afraid that it takes a long time for these things to flow through and to do all the checks. We have arrived at that stage now. There is no nefarious plan. It has not been done as a clever move to send a particular message. I agree that it might not be the best moment, but it is important to make it absolutely clear that we are unwilling to let terrorists act in the way that they do, particularly when they injure and kill our people who are operating in Iraq. A number of speakers have rehearsed the possibility of going further than we have. I believe that there is a difference between the two wings, and have already touched on the issue of how easy it is to differentiate them in the UK. It is difficult to do that, but we should try because it is important.
	I hope that I have touched on most of the points raised. If I have not, I will, if I may, write to noble Lords afterwards. As I said, this is an issue of great importance. A number of noble Lords asked whether the threat from this group is specifically within the UK. I have to say that it is not; it is within Iraq and the Occupied Territories. The threat is not to the UK but to our interests abroad and to those who are serving us abroad. It is therefore important that we do this. It will contribute to our efforts to make the United Kingdom a hostile environment to those who support terrorism. It will send a clear message of our condemnation of Hezbollah's support for terrorism while at the same time showing it that there is a way forward by becoming a proper member of the community and doing all the good things that it does in supporting its own community. As such, I commend this instrument to the House.

On Question, Motion agreed to.

Pensions Bill

Lord McKenzie of Luton: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved accordingly, and, on Question, Motion agreed to.
	House again in Committee on Amendment No. 130EW.
	[The CHAIRMAN OF COMMITTEES in the Chair.]

Lord Lucas: moved, as an amendment to Amendment No. 130EW, Amendment No. 130FG:
	Before Clause 107, line 31, after "Regulator," insert—
	"( ) persons representative of pension trustees,"

Lord Lucas: The provisions for consultation in Amendment No. 130EW seem excessively narrow. That is why I have moved this amendment and the two that go with it. I beg to move.

Lord McKenzie of Luton: I am happy to tell the noble Lord that I agree with him about the importance of consultation with the groups that he is concerned about. I am happy to accept his amendment in principle. Perhaps we can work on the drafting before Report stage. I also gave positive responses to the noble Lord's amendments, Amendments Nos. 130FC and 130FD. With hindsight, I could probably have been even more positive. I should like to clarify for the noble Lord that I believe we can also accept these two amendments in principle. Again, I should like to work with him on the technical drafting over the summer.

Lord Lucas: I am delighted to hear that and am very happy to withdraw the amendment.

Amendment No. 130FG, as an amendment to Amendment No. 130EW, by leave, withdrawn.
	[Amendments Nos. 130FH to 130FK, as amendments to Amendment No. 130EW, not moved.]

Lord Skelmersdale: I apologise for that confusion; it is a rather difficult area. Those few noble Lords who have taken an occasional interest in this Bill may well have wondered what was going on yesterday. It was rather like a pugilistic event between the two Front Benches for most of the time. We had hoped that, following our debate on Monday, the Minister would have withdrawn this amendment, but he chose not to do so. As was noticed yesterday, we spent some considerable time in Committee debating further what could have been transferred to the more productive environment of the DWP consulting in earnest with those who have briefed us. On consultation, I, like my noble friend Lord Lucas, was delighted by the Minister's response to the previous amendment.
	We accept the Minister's assurances that the department will now consult further and hope that that consultation will be broadly based, and not simply with those who agree, wholly or in part, with what the Minister certainly gave me the impression were the Government's settled views. I also hope that the Minister will brief us and colleagues on the Liberal Democrat Benches in good time before Report stage commences. That is shortly after the Summer Recess. My noble friend Lady Noakes said on Monday that the consultation document did not make it clear that the Government were consulting on such a sweeping power as the one contained in Amendment No. 130EW. The word "draconian" springs to mind. In response, the Minister said that,
	"it is pretty explicit in paragraph 1.38 of the consultation document".—[Official Report, 14/7/08; col. 1087.]
	That confused me, for one. I think the Minister intended to refer to paragraph 1.40, not 1.38. That paragraph says:
	"The Government ... proposes to take a regulation-making power which is sufficiently broad-based to enable amendments to be made to ensure that the Regulator has effective powers to deal with ... innovation in the market, and to make sure that the effect of the powers is clear to all the parties in the market".
	The consultees would, in my view, have concluded rightly that what the Government would legislate for bore some relation to the specific issues discussed in the remaining 40 pages of the consultation document. Instead, Amendment No. 130EW takes the widest possible power to make the largest possible number of changes, potentially with infinite retrospective effect. This is part of the problem with the consultation, and one that the Government simply must address. The power needs to be much more tightly drawn.
	The Bill depends crucially on consensus that the contents of Part 1 are the right way forward. The amendment that we have been debating for, it seems, days—although I suppose it is hours—is not, strictly, part of that consensus. The high-handed way that the Government are handling their own amendments to this Bill is not conducive to consensus holding on the wide range of concerns that we still have about Part 1. In particular, we are far from satisfied that the personal accounts project can be delivered on time at an acceptable cost to members and without taxpayer subsidy. We will return to those issues on Report. Our enthusiasm for consensus at that stage will bear a direct relationship to the way that the Government are prepared to address the outstanding issues. It would have been an act of good government for the Minister to have withdrawn his amendment so that his department could commence discussions on an open basis with all—I repeat, all—the interested parties. Instead, by pressing their amendment, the Government seek to go into any such discussions with the whip hand of having the amendment as part of the Bill. That, as I have said before, is a disgraceful way to legislate, especially as Ministers know in their heart of hearts—in fact, rather more than that, because the noble Lord has just said that he will consider favourably some of my noble friend's amendments—that what is being bludgeoned into the Bill today will be amended before it reaches the statute book.
	We have thought long and hard about this. If we were to press Amendment No. 130EW to a Division today, we would run the risk of failing to achieve a satisfactory resolution during the remaining stages of the Bill. Whoever won the Division, the House would have expressed an opinion that would make later changes more difficult or perhaps even impossible. We on these Benches are committed to responsible opposition. In the interests of achieving the right result in the end, we believe that we should not erect procedural barriers to amendments on Report. On that basis, and with a very heavy heart indeed, I shall not be seeking to divide the Committee on this amendment.

Lord McKenzie of Luton: I hope that the noble Lord will agree that what we have had over the past few days is a series of important debates with some excellent speeches that have raised genuine concerns. I hope also that I have been able to reassure noble Lords on a number of issues. It is fair to say that as a result of these debates we are all largely heading towards the same place. I detect that there is broad agreement that the Government need to take action to address emerging issues. I have made it clear that over the summer we will have discussions with those noble Lords, in good time as the noble Lord requests, who have shown a keen interest in these issues to ensure that we can develop the legislation in a way that strikes the right balance. We will engage with stakeholders, including the CBI and the BBCA, to work closely with us on these very important issues. We need to use the relatively short period of the summer to work on how we can best achieve the policy intent set out in April.
	The risks are real and there is a need for the Government to act on them. Our amendment sets out our intention to make changes to anti-avoidance legislation to tackle these risks. On that basis, I urge noble Lords to accept the amendment. Having said that, I am grateful to the noble Lord for indicating that he will not resist it, and I understand his comments on how this has come about.

On Question, Amendment No. 130EW agreed to.
	[Amendments Nos. 131 to 133 not moved.]

Lord Skelmersdale: moved Amendment No. 134:
	Before Clause 107, insert the following new Clause—
	"Announcement regarding link with earnings
	Within six months of the coming into force of this Act, the Secretary of State shall announce to Parliament his intention as to the timing of the implementation of section 5 of the Pensions Act 2007 (c. 22)."

Lord Skelmersdale: This amendment, which would insert a new clause into the Bill, hides for me a real dilemma. For many years we have had annual uprating orders whereby the state pension has been increased by the rate of inflation pertaining in the previous October. The noble Lord has done several, and I did many more. Section 5 of last year's Bill, now enacted, states that the Secretary of State would introduce an order for state pensions to be increased instead by the increase in the average wage. This concept was intrinsically linked in the Pensions Commission's report with the introduction of what we now call personal accounts. The Government have said that they will be introduced in 2012, though recent statements by the chief executive of PADA have thrown some doubt on this. It seems to be merely an objective, not a promise. Furthermore, we do not yet know whether the Government regard the tying of this to the introduction of personal accounts as essential or not.
	The Government have been extremely vague about great chunks of the Bill. It is in essence a framework Bill, and the Minister's attitude, as I said on Amendment No. 130EW, has been one of, "Let's have it in the Bill, and if necessary we'll change it by order". That is no way to legislate. If the Government are unsure of the final format for a particular clause in Committee, they should allow themselves time to think and bring the subject back on Report. As for this amendment, I believe that the Government need to be pinned down on the start date of restoring the link with earnings. For us on these Benches, to allow flexibility is one thing, but it does not extend to a vague promise to change things by the end of the next Parliament. Six months after the passing of this Bill, the Government should know when restoring the link will be possible. Indeed, if my great party had won the 2005 election it would have already happened, as we promised in our election manifesto. So it is time, or rather will be in eight or so months, for the Government to stop their dithering and come to a decision. On this matter at least, it is time for the Government to govern. I beg to move.

Lord McKenzie of Luton: The amendment moved by the noble Lord, Lord Skelmersdale, seeks to make the Government announce in Parliament their intentions with regard to the start date for earnings uprating of the basic state pension within six months of the provisions of this Bill coming into force. Let me begin by stating, as I have done already in earlier debates in Committee, that the Government have clearly set out their commitment to introduce earnings uprating. We gave this commitment in the May 2006 White Paper, which first set out our proposals for pensions reform. I assure noble Lords that we will honour that commitment.
	Restoring the earnings link is fundamental to our forward plans for the pension system. It is the bedrock on which our reforms are built and we recognise that there is interest in finding out when it will happen. Our objective is to do this from 2012, subject to affordability and the fiscal position, or in any event by the end of the next Parliament at the latest. This timing strikes a balance between maintaining affordability of our overall package of reforms, yet tackling the challenges identified by the Pensions Commission. We have said that we will make a statement on the precise date at the beginning of the next Parliament.
	The noble Lord's amendment would require the Secretary of State to make an announcement regarding the timing of the earnings link within six months of the provisions of the Bill coming into force. That would be at least three years before 2012. It would not allow the Secretary of State further time to take account of affordability and the fiscal position before announcing when earnings uprating will start. It is sensible to retain the current arrangements to review the timing of the earnings link with due regard to affordability if the prevailing economic conditions closer to the time look uncertain.
	We will make an announcement early in the next Parliament, and the Pensions Act 2007 commits us to making an order before 1 April 2011. Section 5 of the Pensions Act 2007 requires the Secretary of State to make an order identifying the designated tax year—the first tax year in which a review with regard to earnings will take place—and earnings uprating will start the following year. We have legislated to restore the earnings link to the basic state pension to ensure that it happens. We have put that commitment on the face of the 2007 Pensions Act to provide certainty. We do not think that stipulating the timing of an announcement to be made to Parliament about our intention to restore the earnings link in the way proposed by this amendment is necessary. We have given as much commitment on this as is reasonable and prudent, and therefore I ask the noble Lord to withdraw this amendment.
	I will say in reply to the noble Lord's assertion that if his party was in Government at the moment, the earnings link would be restored, that I can presume he will give us a precise date as to when in the event, in my view unlikely, that his party returns to Government, they would restore the link. Can we have certainty from the noble Lord, if he is seeking to press us on the issue? However, we have made our commitments very clear and I would ask him to withdraw the amendment.

Lord Skelmersdale: Never being one to resist a challenge, I can tell the noble Lord that rather than by the end of the next Parliament, it would be early in the next Parliament, should we win the election. That is why, despite all the assurances and the long timescale of those assurances, I do not think that what the noble Lord has been telling us, not once but several times during the course of our deliberations because the matter has been raised on other amendments, is sufficient. It is one thing to be reasonable and prudent, but it is quite another to be as vague as the noble Lord has been over this.

Lord McKenzie of Luton: Perhaps the noble Lord will permit me to intervene. He said that his party, given the chance—although I do not think that that will happen—will see to this early in the next Parliament. Would that be before 2012?

Lord Skelmersdale: It depends on when the election is called. I wish to seek the opinion of the Committee.

On Question, Whether the said amendment (No. 134) shall be agreed to?
	Their Lordships divided: Contents, 87; Not-Contents, 115.

Resolved in the negative, and amendment disagreed to accordingly.
	[Amendment No. 134ZA not moved.]

Baroness Hollis of Heigham: moved Amendment No. 134ZB:
	Before Clause 107, insert the following new Clause—
	"Trivial commutation limit
	(1) The trivial commutation limit shall be raised as prescribed and shall not fall below a minimum level of £25,000.
	(2) All pension sums trivially commuted shall not be included in the assessment of capital, income or notional income for income related benefits."

Baroness Hollis of Heigham: I declare an interest as a trustee of TPAS, The Pensions Advisory Service, which tells me that this is a regular problem on its helpline and one that it is concerned about. The amendment is obviously a probing one, unworkable and unaffordable as it stands.
	I had intended, but time does not permit it, to raise other interconnected issues such as risk, means-tested benefits and trivial commutation and, in particular, to press my noble friend on the issue of stranded pots. In brief, the risk is that older, poorer women may not have a big enough pot to float them off means-tested benefits. For them, as the PPI has identified, it may not pay to save. The best way to overcome that risk is to help her to increase the size of her pot, ideally to cover her earnings below £5,000, but also to consider increasing the annual or lifetime sum so that it can go into personal accounts. One other option, the purpose of today's amendment, is to allow the transfer of small pots into personal accounts or, if the personal account is the small pot because there are only a few years of savings in it, to allow a transfer out into a larger alternative existing pot.
	I know that the industry is concerned about destabilising the existing annuity market, but the effect on it would be trivial and would overcome the very real injustice—I might go so far as to say "theft"—of small stranded pots. Take the hairdresser who has been self-employed and more recently employed, perhaps over the past decade, in a larger salon, who, along with her employer, is now paying into a personal account. She ends up with a personal account pot of, let us say, £18,000. That is too large to trivially commute because it is above the £16,500 limit, so she must annuitise.
	However, that hairdresser also has three small personal pensions of £2,000 each, with different providers from different times in her life when she was self-employed and thought that she had enough resources to build up some modest savings for retirement. If she acquired those three small pots as an employee working in a salon for another employer, and therefore with an employer's contribution so that she had paid in only half, she would be able to cash them in; since last year's Budget, such pots are going to be ignored by HMRC, which is a sensible and generous provision.
	If, instead, those three little £2,000 pots are personal pensions, then although she has paid for every penny in those pots without an employer contribution, she cannot trivially commute them because her personal account is above the trivial commutation limit. They are too small to be annuitised, as pots below £5,000 are too small for the industry to bother with. I am told that the industry will not normally bundle them up if they are from different providers. She is not allowed, for at least five years and maybe not even then, to transfer them into her personal account and build her pot. So what happens? She cannot access those three £2,000 pots at all. They are stranded. They are in limbo. One-quarter of her lifetime savings is completely lost to her.
	Why are those pots not ignored, like small occupational pots with an employer contribution? Because of HMRC's fear that large personal pots could then be fragmented and the system manipulated. We could avoid that by capping the total sums. I get fed up sometimes with our apparent willingness to accept that in order to avoid one rich person's theoretical manipulation of the system, 100 people will lose their savings, like our hairdresser. That money is lost: £6,000 of £24,000 is gone; it is inaccessible. That is shocking and unacceptable. Incidentally, that £6,000 in the little stranded pots might have been the extra personal savings that sprang her clear of means-testing. Instead, the money that she has saved goes not to her but to other members in her scheme and she might perhaps fall back on the taxpayer instead. So it is not only shocking but stupid.
	I hope that my noble friend will get agreement from the industry that in this situation, where the industry does not want to annuitise, it will raise no objections to the transfer in of those small pots to personal accounts and that, likewise, if the personal account is the smaller pot, it could be transferred out so that the PA pot is not lost. That might take place at retirement only, although it would be more attractive if it could be done earlier when the pot might seem more worth while. I hope that my noble friend can come back, either today or on Report if we need amendments—perhaps he could tell me if that is the case—with a way forward on this. If he does not, I shall—with your Lordships' support, I hope—return to the matter.
	I had been proposing on this amendment to raise the issue of trivial commutation. If the cap were raised from £16,000 to £25,000, that would also help the problem of stranded pots by providing more headspace for trivial commutation. All such proposals have implications for pension credit, however, and, given the pressures of time, I do not propose to explore those issues today. If, instead, we could move forward to resolve the issue of the hairdresser's stranded pots, I would be content and I suspect that your Lordships would be as well. I beg to move.

Baroness Dean of Thornton-le-Fylde: I am pleased to lend my support to my noble friend's amendment. It is a small but important change that would be helpful to a number of low-paid, low-income women. When I was listening to the example that was given, the words "daylight robbery" came to mind. We have people on low income who, at a time in their lives when they feel that they may be able to save for a pension, put money into a pensions pot but then, due to lifestyle changes, cannot continue to pay and never feel the benefit of that hard-earned money. As it stands, that is extremely discriminatory. It is discriminatory in another way, too: if the individual had been an employee in an occupational pension scheme, they would have been in an entirely different position and would have felt the full benefit of their contribution into the fund.
	The amendment impacts on some of the poorest people in our community who want to do the right thing. They do not want to fall on the state. When they have been able to afford to pay something into a pot for retirement, they have done so. Yet in that process, because of their life circumstances, they could lose hard-earned money. They would have been better off putting it in the bank, for instance, than into a pensions pot.
	I have great pleasure in supporting the amendment. I will listen with interest to the Minister's reply. I hope that he gives us some reason to hope that, when we return to the Bill later in the year, this is one area on which we will be able to get a yes.

Lord Kirkwood of Kirkhope: I add our support to the amendment so ably introduced by the noble Baroness, Lady Hollis. The key thing that she said is that there are pots of money that the industry wants nothing to do with. She has done the Committee a great service in reminding us of that, as the problem is getting worse. It affects the lowest-paid households in our community and it needs to be addressed. It cannot be beyond the wit of man for the Government to come to some accommodation with the industry, which self-confessedly does not want to get involved in de minimis—so far as it is concerned—levels of money that are none the less hugely important to the people who have these stranded hairdressers' pots, as was so eloquently argued by the noble Baroness. For the life of me, I cannot see any reason why, with a bit of effort and good will, we could not get some kind of solution along the lines that the noble Baroness has suggested.

Lord Skelmersdale: I, too, have sympathy with the noble Baroness's amendment, which would move the pensions savings regime in this country a little closer to the flexible model that we would like to see. Giving pensioners more control over their retirement would add an incentive for them to save more over their lifetime and would benefit many as the concept of working life becomes less clearly defined, especially as one approaches retirement age, whenever that is.
	The Committee may remember that the Minister answered a Question on that subject on Monday. The Pensions Act 2004 allows anyone over state pension age to continue paying national insurance contributions up to the age of 70 and thereafter to commute this extra sum into a lump sum as an alternative to an increased weekly pension. I am sure that the noble Baroness remembers discussing that. Therefore, for the noble Lord to say, as he did at Question Time on Monday, that the Government encourage people to work beyond 70 is somewhat erroneous. Be that as it may, the interesting thing about commuting a full five years of the end-of-life state pension is that it amounts to about £25,000. I wonder whether that is why £25,000 is mentioned in the noble Baroness's amendment.
	We have discussed numerous times the impact of a more fragmented working life on people's pension pots. The inconvenience and unnecessary administration costs of multiple small pots rather than fewer large pots are, I am sure, fully appreciated by the Government. If they are not, they jolly well ought to be. The changes over the past few years to increase the portability of small pensions were very welcome and I see the possibility of raising the commutation limit in much the same spirit. However, I would have preferred it if the noble Baroness and the noble Lord had not mentioned hairdressers' small pots in connection with £25,000; I think that they would rarely have such a large pot.

Baroness Howe of Idlicote: I support the amendment. I was attracted by the idea when it was raised earlier. Given that more and more people of both sexes now take jobs for short periods and then move on, this would be a fitting measure. If a female hairdresser manages to put aside a quarter of her pension savings, even before she has children or has to look after a grandparent or a parent, that is even more reason to think of all the money that the state saves through people undertaking such caring responsibilities. Like the noble Baroness, Lady Hollis, I prefer not to cap the total funds, particularly as we are talking about relatively small sums. I also like the possibility of moving the sum—whatever it is—the other way into a different, and no doubt existing, pension scheme that is already in the hands of insurance companies. That way, the companies might not feel quite so threatened as apparently they do by some of the plans that are being put forward.

Lord McKenzie of Luton: I thank my noble friend Lady Hollis for raising this important issue, which is clearly supported across the Committee. I shall confine my remarks to stranded pots, which is the substance of the issue to which she spoke.
	We have made clear our commitment to banning pension transfers into and out of personal accounts. As the Committee will be aware, this prohibition is designed to minimise the impact on the market caused by the scheme's introduction in 2012 and to ensure that the scheme remains focused on the target market of low to moderate earners. The transfer ban is designed to promote simplicity for employers, individuals and the personal account scheme, as transfers can involve complex financial decisions and processes for all parties. We recognise, however, that some personal account members at the point of retirement may wish to consolidate their pension savings into a single vehicle and that the transfer ban could complicate their arrangements.
	I am sympathetic to my noble friend's concerns that the personal account scheme should facilitate ways to maximise retirement incomes. I should like to examine our approach to those individuals with stranded pots that are too small to be economically attractive to annuity providers but when combined with the value of other pension funds are not eligible for trivial commutation. Allowing individuals in this scenario to transfer their personal accounts funds to and from the scheme could promote the consolidation of pension saving while keeping with our commitment to focus the scheme on the target market.
	I assure my noble friend that the scheme order with regard to transfers in and Clause 111 with regard to transfers out provide us with sufficient flexibility to legislate if we decide that these exceptions should apply. We would like to discuss this issue with stakeholders over the summer in advance of developing the likely content and approach for the secondary legislation, the scheme order and the non-legislative scheme rules for a public consultation in March 2009. I am therefore confident that we can make progress on this issue. With those assurances, I hope that my noble friend will not press her amendment.

Baroness Hollis of Heigham: I thank the Committee. It is always a pleasure—and not just for political reasons—to get such warm support for an issue on which we all recognise that injustice is being done to people who can least afford to lose their modest savings, as my noble friend Lady Dean so eloquently put it. I am glad that the Minister respected the fact that the Committee fully supports finding a way to move forward on this issue without necessarily circumscribing the way in which he should do it.
	I also thank my noble friend and the staff who have worked hard on this issue—this is essentially an HMRC rather than a DWP issue, which I think is why it was uncovered relatively late—for the positive and constructive response. However, does he expect, or wish for, the trigger of a probing amendment on Report so that he can tell the House what the arrangements will be? I realise that the Summer Recess is approaching and that he will be exploring a lot of other issues, but I am sure that he has no intention of allowing this to be lost in the short, long or distant grass. None the less, I hope that before I withdraw the amendment he can advise me whether he would welcome a probing amendment on Report so that we would all know whether the Government have managed to move the debate forward over the summer.

Lord McKenzie of Luton: I always welcome amendments from my noble friend. Irrespective of whether they are forthcoming, I shall ensure that we stay in touch with her as this issue develops over the next couple of months.

Baroness Hollis of Heigham: I am grateful to my noble friend. I shall take advice on whether I need to table an amendment or whether it would be better for my noble friend to send a letter to noble Lords at the end of the summer, which would do just as well. I again thank noble Lords for their support for the amendment, which I beg leave to withdraw.

Amendment, by leave, withdrawn.

Lord Lucas: moved Amendment No. 134ZBA:
	Before Clause 107, insert the following new Clause—
	"Publishing of reports by Pensions Regulator
	In section 89 of the Pensions Act 2004 (c. 35) (publishing reports etc.) after subsection (3) insert—
	"(4) The Regulator shall publish its determinations, including Clearance Statements issued under section 42 or 46 together with the reasons for that determination within 28 days of the determination being made.
	(5) The Regulator may, at the request of the directly affected parties, anonomise a determination published under section (4) above.
	(6) The Regulator shall publish its policy on the exercise of its determinations in order that the exercise of them is consistent and transparent.""

Lord Lucas: I shall also speak to Amendment No. 134ZBB. Amendment No. 134ZBA would encourage the regulator to be more open about his determinations than he has been hitherto. Although he published the clearances given by the determinations panel, he has not published anything about those given by staff. Given the context of the broader discretion that he is likely to have as a result of the forthcoming regulations, it is important that he should be encouraged to build up in public a body of precedent which will guide people who might be subject to his ire in the future as to what his attitude is likely to be. It could only assist if he was more helpful than at present.
	The second amendment slightly redresses the balance in situations where the Pensions Regulator is actively pursuing a case against an individual or business. At the moment there is no way for the accused to know the full breadth of information in the case against them and in particular whether mitigating material exists that the Pensions Regulator has but has not disclosed. This is not a clear and proper basis for natural justice; both sides ought to know. There ought to be full disclosure in principle. This amendment is to explore a way of achieving that, so that parties being prosecuted by the Pensions Regulator are in the same position as they would be were they up against a different kind of tribunal. I beg to move.

Lord McKenzie of Luton: With these amendments, the noble Lord raises the relationship between transparent decision-making and effective regulation. This issue was discussed by the Public Accounts Committee in another place recently, and the Government and the regulator recognise that there is an important balance to be struck.
	The power to publish reports in Section 89 is a permissive power. It is for the regulator to consider when and in what circumstances to publish reports. When Parliament discussed this during the passage of the 2004 Act it agreed that this provision should be widely drawn to ensure that there are no restrictions on what the regulator is able to publish following an investigation. The regulator originally considered that, given the issues of confidentiality, it was better to approach this on a "publish by exception" basis.
	The Public Accounts Committee recently considered transparency in reporting as part of its scrutiny of the Pensions Regulator. It found that the regulator should publish determinations to bring clarity and transparency to regulator decisions. There was no question that this process necessitated changes to statute. In response to the PAC hearing, since December 2007 it has been the regulator's policy to publish determinations on issues reserved to the Pensions Regulator's determination panel unless there is a good reason not to. It has published detailed determinations in some high profile cases such as the Sea Containers and Telent cases. This publication policy is in the public domain. The regulator recognises the educative value in publishing reports and now has a firm policy that it should publish in all cases other than by exception. All past determinations were recently published on the Pensions Regulator's web pages.
	I appreciate the intention behind the noble Lord's amendment: providing as much transparency as possible in regulatory decision-making. However, it would make publication of reports mandatory and remove any exercise of judgment by the regulator on whether publication was appropriate. This additional administrative duty upon the regulator would not materially enhance its performance in the exercise of its statutory functions. It could constrain a regulator's ability to depart from its published policy on the exercise of its functions even where justice and circumstances would otherwise require it, for example where there is a criminal investigation.
	It would also require the regulator to publish even when it considered that the circumstances of the case made the parties affected identifiable, even with anonymisation. In the regulator's experience, employers and the pensions industry would have serious concerns with this proposal. The information would be of a commercial nature and usually sensitive. Even in an anonymised form there is a serious question of whether corporates would want to share this with other parties. Many clearance applications relate to future corporate transactions, and, as such, parties often require stringent confidentiality on the facts of the case. In some cases clearance will be sought for transactions that subsequently do not take place. It is important that parties feel able to share all relevant facts with the regulator without concern that details of their business position or potential strategic moves will be published.
	Such a mandatory requirement would undermine the industry's trust in the regulator to maintain confidences, deterring potential approaches and interaction and generating uncertainty within the industry. This amendment would run counter to the regulator's efforts to maintain the confidence of the pensions industry in maintaining confidential and commercially sensitive information. There is already transparency under the regulator's current regime. The regulator provides both advisers and their clients—the applicants or trustees—with the detailed determination notices. These set out the reasons for the regulator's intervention and provide advisers with a frame of reference about how the regulator operates.
	On the second amendment, the Pension Regulator's determinations panel procedures give the panel a power to direct how a hearing will take place, potentially including what documents should be shared. The amendment would go wider in scope than is intended. It would make that apply to all determinations, even those not made by the panel. This would make the clearance process virtually unworkable given the number of documents involved. It could result in clearance applications undergoing investigations taking several months and raise questions about which documents corporates would want to share.
	I understand the noble Lord's intentions, but there is a risk that such an approach could divert focus and resources from other areas that require regulatory action. As established and also under the Hampton principles, the regulator is risk-based, with the freedom to focus its resources on those issues that place members' benefits or the PPF at the greatest risk. If accepted, the amendment could stifle the regulator's ability to react quickly in clearance applications. Introducing these requirements on the regulator would simply constrain its flexibility to focus resources on key risks. It would be unnecessary unless the regulator considers the relevant information when making its decisions. Then such decisions could be open to challenge.
	If it would help the noble Lord, I would be happy to facilitate the opportunity for him to meet with the Pensions Regulator to discuss his concerns in greater detail. Perhaps, with his colleagues and other noble Lords, he might find this a fruitful way of getting further into these issues.

Lord Skelmersdale: The danger is that regulators become like Ministers in their need to justify themselves. Ministers do this by introducing legislation and subordinate legislation into Parliament, and there are occasions when the regulator does it by secrecy. Otherwise, if a body of case law, as referred to by my noble friend Lord Lucas, were built up, the regulator might have less of a job to do. People would know the direction in which he was acting. To allow the regulator to make his own decisions with little proscription through Acts of Parliament is a little suspicious. Should my noble friend accept the offer of a meeting with the regulator, I would like to join in to express these thoughts more fully to him.

Lord McKenzie of Luton: I would be more than happy to facilitate the noble Lord's involvement in that as well. Obviously it is not entirely my decision but I cannot believe it would not be possible.

Lord Lucas: I am grateful for what the Minister has said. He gave a full answer to my first amendment; I must go away, read it carefully and think on it. While I was less in agreement with what he said on the second amendment I will certainly be happy to follow the path he laid out and discuss these matters with the Pensions Regulator. I look forward to spending my holidays in such a blissful state. I must apologise to him that I am now going to desert the Committee to defend the honour of the Lords against the Commons on the river. I am sure he will manage the rest of the Bill without my help.

Lord McKenzie of Luton: We will miss the noble Lord but wish him well in his endeavours later today.

Lord Lucas: I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 134ZBB to 134ZBD not moved.]
	Clause 107 agreed to.
	Clause 108 agreed to.

Lord Tunnicliffe: moved Amendment No. 134ZC:
	After Clause 108, insert the following new Clause—
	"Payments to employers
	In section 37 of the Pensions Act 1995 (payment of surplus to employer) after subsection (1) insert—
	"(1A) But this section does not apply in the case of any of the payments listed in paragraphs (c) to (f) of section 175 of the Finance Act 2004 (authorised employer payments other than public service scheme payments or authorised surplus payments).""

Lord Tunnicliffe: This amendment corrects an omission in the Pensions Act 2004. It introduces an exemption from the strict conditions that must be satisfied before the trustees of a trust-based occupational pension scheme can authorise a payment to the sponsoring employer from the funds of the scheme.
	These conditions are set out in Section 37 of the Pensions Act 1995, and they are commonly referred to as the surplus rules. There was, however, an exemption from this rule for administrative and certain other payments, allowing the trustees to make them without reference to the surplus rules. Unfortunately, this exemption was inadvertently not carried forward when Section 37 was substantially revised by the Pensions Act 2004. It was not our intention to remove this exemption, and an equivalent provision should have been carried forward.
	This amendment corrects the position through the introduction of an exemption that refers to payments listed in Section 175 of the Finance Act 2004; namely, compensation payments, authorised employer loans and scheme administration employer payments. It also refers to a regulation-making power that enables HMRC to extend the scope of authorised employer payments in particular circumstances.
	It has been necessary to update the precise wording of the exemption because Section 37(7) referred to tax legislation that has now been replaced as part of the major changes to the taxation regime for pension schemes introduced by the Finance Act 2004. This amendment will restore the longstanding position that was inadvertently removed by the Pensions Act 2004. I beg to move.

Lord Skelmersdale: Keen as I am—or rather, as I have been throughout the passage of this Bill—to consider the great raft of government amendments to which we have been exposed in a spirit of scepticism and questioning, the Minister will be relieved to hear that I find this amendment totally benign. However, I would just tease whoever drafted the Bill for needing to correct this mistake.

Lord Tunnicliffe: I am sorry; I did not quite get the noble Lord's final stinging question.

Lord Skelmersdale: Don't worry.

On Question, amendment agreed to.
	Schedule 8 agreed to.
	Clause 109 [Appointment of trustees]:

Lord Skelmersdale: moved Amendment No. 134A:
	Clause 109, page 51, line 13, leave out paragraph (a)

Lord Skelmersdale: This is a probing amendment; whether it will remain so in the Bill's future stages depends very much on the Minister's answer. It would delete paragraph (a) from Clause 109(1).
	We have already had an important debate on the powers of the Pensions Regulator. Compared with the extensive powers proposed in the Government's new clause before Clause 107, the extension of the powers of the regulator in Clause 109 is much less significant, but we should still debate the need for the alterations proposed in that clause. Under the Pensions Act 1995, the Pensions Regulator can remove trustees when it thinks that it is "necessary" to do so. Clause 109 changes that test to one that is "reasonable"; my amendment deletes that change.
	Trustees are the bedrock of the pensions system in the United Kingdom and they operate in trust law to act for the benefit of members. We are concerned that this change will act to undermine the foundations on which private sector pension provision is based. Pension schemes can have a mix of trustees, ranging from the completely independent and professional trustees through to employer-nominated and member-nominated trustees. There is an exception to this general rule, which we will come to shortly. This general rule reflects the fact that it is useful to bring to bear different perspectives.
	I acknowledge that there can be difficulties with boards of trustees in practice, if only because trustees are human and their abilities and knowledge can vary hugely. The average trustee—this includes professionals as well as non-professionals—can struggle to cope with the complexities of modern investment strategies and the strength of the employer covenant when corporate restructuring is proposed. They are also severely tested when issues such as buyouts confront them; we have debated that subject extensively over the past few days. That is why we can see that the Pensions Regulator should have a reserve power to change the trustees when it is necessary. To extend that power to where the regulator thinks that it is "reasonable" risks undermining the whole model. Why does the 1995 Act need to be changed?
	The existing power was perfectly adequate, for example, to allow the regulator to appoint independent trustees in the case of Telent and the Pensions Corporation. The regulator has the power conferred by Section 33 of the 2004 Act to issue prohibition orders in respect of trustees who are not considered to be "fit and proper". Furthermore, Clause 109(1)(d) extends the circumstances in which the regulator may appoint trustees for the protection of the interests of the generality of the members. Can the Minister describe the circumstances in which a combination of the existing powers and those in paragraph (d) would not be adequate? As I said, the powers were used effectively, and even upheld on challenge, in the Telent case. What could be more challenging than that?
	We do not believe that it is appropriate to confer powers on the regulator unless there is a clear need for them. Using the criterion of reasonableness could allow the regulator to start to impose his own judgment on the abilities and competence of trustees. That would go in the wrong direction from a regulatory standpoint.
	The appointment of trustees goes to the heart of the operation of pension schemes. A power based only on reasonableness would be a step on the road to making our defined benefits system almost state-controlled rather than state-regulated, which is an enormous difference. I beg to move.

Lord McKenzie of Luton: Our occupational pension system depends, in large, on trustees who play a vital role in the running of the schemes and looking after the interests of scheme members. The noble Lord was clear about that when he moved the amendment. However, it is not always the case that a board of trustees is equipped to deal with the challenges that it can face—collectively, it may not have the knowledge and expertise it needs, or a conflict of interest may arise that hinders the effective operation of the trustee board.
	The Pensions Act 1995 provides the Pensions Regulator with a power that enables it to install trustees. These trustees may be existing members of the scheme or, where appropriate, independent trustees who are professional trustees and fully independent of the employer or any other interest in the scheme.
	In another place, Clause 109 amended the Bill to replace the "necessary" test in Section 7(3) of the Pensions Act 1995 with one of reasonableness so that the Pensions Regulator could take action to appoint trustees where it is reasonable to do so. The noble Lord's amendment, as he outlined, would reverse that amendment and retain the present "necessary" test.
	The "necessary" test was introduced in the context of a different regulator and a different market environment. As we have discussed a number of times, particularly this week, developments in the pensions market are fast moving and the "necessary" test requires a burden of proof that is inappropriately weighted against regulatory intervention, even where that intervention may be the right and the most reasonable course of action.
	We have seen recently how the regulator used this power to install independent trustees in a scheme whose employer had been taken over by a new organisation that sought to install its own senior staff as trustees and to manage the scheme's assets in order to achieve returns to shareholders of the new organisation that appeared to place these new employer-appointed trustees in the position of an acute conflict of interest. This case is one example of the way that developments in the pensions market can be fast moving, and risks in the pensions environment can change quickly. It has become clear that the "necessary" test constrains the regulator, who may only appoint a trustee if he is satisfied that there is no other option available, and must act almost as a last resort. If regulation is to be effective, it must be sufficiently agile to enable swift intervention where there is justification. A "reasonable" test will deliver this. The test is well known in law and will provide the regulator with a less fettered power, while remaining transparent and proportionate. When using this power, the regulator will have to seek the approval of the determinations panel, and its decision in turn will be subject to appeal to the Pensions Regulator Tribunal, and subsequently to the Court of Appeal.
	The noble Lord raised the issue of trustees and the Telent case. This has now been resolved to the satisfaction of all parties, and is an example of how developments in the pensions market can be fast moving, and risks in the pension environment can change quickly. In that case, the regulator was able to use existing powers to install independent trustees. However, it has become clear that the "necessary" test constrains the regulator, who may only appoint a trustee if he is satisfied that there is no other option available, and must act almost as a last resort, as I said earlier.
	The CBI commented on these amendments when they were moved in Commons Committee on 19 February 2008:
	"These additional powers were deemed necessary to ensure the regulator can effectively regulate against the new business models that have been developed in the non-insured pensions buyout market. The 2004 Pensions Act, which established the regulator, has been largely successful and any new powers must be used for the intended purpose only and not affect the majority of schemes and legitimate business activity".
	We certainly agree with that comment.
	I hope that that explanation has satisfied the noble Lord and that he will withdraw the amendment.

Lord Skelmersdale: I will withdraw the amendment, but I still have difficulty, not least with the Minister's answer, which I will have to read with great care. I have difficulty because, as the Minister admitted, the Telent case did not need the "necessary" test. I accept that the "necessary" test is used in legislation covering another regulator. If the Minister could give me the reference at some stage—he does not have to do it now—I would be grateful.
	There is no doubt that the regulator must have the power to remove trustees, either individually or as a block, in certain circumstances. We all agree on that. The question remains, how does he classify his judgment? Should it be "reasonable", which has been defined in many cases on the statute book by the courts? I will look extremely carefully at what the Minister has said, and I will be particularly interested to read his—what will it be?—17th or 18th letter, with the reference to the legislation about another regulator. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 109 agreed to.
	[Amendment No. 134B not moved.]
	On Question, Whether Clause 110 shall stand part of the Bill?

Lord Skelmersdale: I should mention my noble friend Lady Noakes, now we are almost at the end of the Bill, who apologises for not being here to grill the Minister in her inimitable way. Alas, she had another appointment.
	My noble friend and I gave notice that we wished to debate this clause because of concerns that had been expressed about the way in which the regulator is potentially usurping the proper role of trustees when valuing the assets and liabilities of a scheme. It takes the regulator into areas of judgment that are properly those of trustees. The Government have described the need for this clause in the Explanatory Notes. Paragraph 306 on page 46 states that,
	"doubt has arisen as to whether the Pensions Regulator can make use of the powers in section 231(2) if the sole ground of concern is that the actuarial methods or assumptions used in the calculation of the technical provisions do not appear to have been chosen prudently".
	Stated thus, Clause 110 seems unobjectionable. However, as is so often the case, what you read on the label does not fairly describe the contents. The amendment says nothing about prudence in the selection of actuarial assumptions. The regulator's powers in Section 231 of the Pensions Act 2004, which are being amended by Clause 110, relate to the failure of the trustees and others to do certain things. The powers were not designed to be attached to judgmental issues such as pitching the regulator's judgment about particular actuarial assumptions against those of trustees. The Government's explanation of Clause 110's amendment to this section does not tell the whole story.
	I agree that the regulator should have appropriate powers. However, given the extensive parliamentary consideration given to the Pensions Act 2004, we should be wary of further extension without good evidence of need. The regulator has been consulting on guidance on actuarial assumptions, and this has sent shockwaves through those who still struggle to support defined benefit schemes. The regulator has signalled that he will "scrutinise"—this is code for something tougher—those schemes that do not use the long cohort for mortality improvement, or use underpinning improvement assumptions tending towards zero. I believe that I am correct in saying that most schemes at present use the medium cohort rather than the long cohort. This is a significant move, and one that has generated much controversy among pension providers; hence the need for this clarifying clause. The confusion that it is designed to clear up was the natural confusion felt by those who had no idea that the regulator should have the right to pronounce on judgments at this level, and who strongly resist such a move.
	The decision on whether a long or medium cohort should be used is one of many that the trustees must make on the advice of their actuary. It would be wrong if the regulator was able to impose the choice of a long cohort, with no evidence that a risk-based approach will be used. The long cohort may or may not be the right route to follow, but the concern is that this will be imposed on a big-bang basis and produce huge shocks to the funding assumptions of employers. We know that the Government believe in a risk-based approach. The Pension Protection Fund is predicated on just such an assumption. However, there is no evidence that the regulator will apply a risk-based approach to forcing changes. The evidence from the consultation document suggests the reverse. Furthermore, the regulator intends to go back to March 2007, and could potentially unpick hard-fought agreements about recovery plans between trustees and employing firms.
	This is the background to the additional power in Clause 110. The regulator has already moved beyond the basic approach that it is for the trustees to decide their actuarial assumptions on a prudent basis, and on the basis of actuarial advice. The regulator has various powers to back that up if the trustees are behaving improperly, including the power to appoint new trustees, which we have debated from time to time. Now the Government are seeking to give the regulator the power to overturn the trustees' assumptions, even if they have been arrived at prudently on the basis of actuarial advice. It will be the regulator imposing the judgment over the trustees.
	We fear that this is another nail being hammered into the coffin of the trust-based foundation of defined benefit provision. I shall listen with interest to hear whether the Minister can allay the fears that have been expressed by the CBI and some individual, large, defined benefit scheme employers. If this is another nail in the coffin of DB schemes, it cannot be the right thing to be doing.

Lord McKenzie of Luton: I seek to allay the concerns of the noble Lord, Lord Skelmersdale.
	Clause 110 addresses an issue which has arisen about the circumstances in which the Pensions Regulator can use its powers to regulate the scheme funding requirements for private sector defined benefit schemes.
	Section 231 of the Pensions Act 2004 provides the regulator with a wide range of powers relating to the scheme funding requirements. They enable the regulator to take action, for example, where there has been a breach of the legislation, or where the trustees and the sponsoring employer cannot reach agreement on a key aspect of their scheme's funding arrangements. Those powers include a power to specify the actuarial assumptions to be used in a valuation of a pension scheme's assets and liabilities.
	One of the key responsibilities of a pension scheme's trustees is to decide what actuarial assumptions are to be used in an actuarial valuation of their scheme. Legislation specifically requires the trustees to choose those assumptions prudently. The regulator has recently faced resistance in cases where it has queried the extent to which the trustees have complied with the requirement to choose actuarial valuations prudently, and its power to act in those circumstances has been challenged.
	The actuarial assumptions used in a valuation are absolutely critical in establishing a scheme's correct funding position and in determining an appropriate level of employer and, if appropriate, employee contributions to the scheme. In short, the purpose of the clause is to ensure that the regulator can use its existing scheme funding powers where the assumptions chosen by the trustees do not appear to be prudent. It is necessary to ensure that the regulator can take appropriate action to prevent increased risks to the security of scheme members' benefits.
	The noble Lord referred to the regulator consulting on longevity assumptions. That is an important issue, and the regulator's consultation has provided the opportunity for a serious discussion of the issues. The regulator has undertaken a full consultation and is taking seriously the views raised. It would not be appropriate to comment on the outcome, because that would prejudge the consultation, but it is clearly in all our interests that longevity issues are tackled effectively and that we do not store up ever bigger problems for another day. Equally, we are clearly committed to ensuring that actions across the system are appropriate and proportionate. I understand that the regulator expects to publish its response shortly.
	The noble Lord also raised issues around whether the regulator would use this power to impose long cohort assumptions. There are no standard assumptions to impose. The regulator will ensure that a scheme-specific approach is taken, as should all trustees as part of ensuring prudent technical provisions. It will not impose a long cohort assumption.
	The noble Lord referred to the Association of Pension Lawyers, and he will be aware that it has written to DWP officials about the effect of this clause. The association was concerned that the clause gives the regulator new, wide powers and that it introduces subjective considerations by the regulator for the first time. The APL is also concerned that the clause is being introduced without sufficient consultation. As I said earlier, the power for the regulator to direct the actuarial assumptions to be used in calculating a pension scheme valuation already exists. The clause simply ensures that the existing power can actually be used where the actuarial assumptions do not appear to have been chosen prudently by the trustees.
	We do not agree with the suggestion that the clause introduces subjective consideration by the regulator for the first time. The regulator's scheme funding powers can be used only where it appears to the regulator that there has been a breach of the legislation. The regulator must therefore already decide in each case whether it considers that such a breach has occurred. Similar powers also already exist in respect of scheme funding recovery plans. The regulator can intervene if it considers that the trustees have not taken account of matters such as their scheme's asset and liability structure, its risk profile, its liquidity requirements and the age profile of its members.
	The noble Lord also referred to the description of the clause in the Explanatory Notes. He may be aware that we acknowledge that the description of the clause in the notes that accompanied the Bill on its introduction could have been better expressed. There is an intention to update those notes in subsequent versions of the Bill. I hope that the noble Lord will be reassured by what I have said.

Lord Skelmersdale: Perhaps I might respond to one or two of those points. I was well aware that there was a proposal to produce revised Explanatory Notes, but I am not sure whether they will be revised over the summer, or whether the notes will accompany the Act when it arrives on the statute book.
	However, I had no idea that the description of Clause 110 was one of the revisions that was going to appear in that new document. I am grateful for that, and I am sure that the various stakeholders will also be grateful. Quite a lot of stakeholders are currently somewhat concerned. I will refer them to the Minister's answer, so that they can give me further advice on this point.

Lord McKenzie of Luton: If it would help the noble Lord, the information that I have is that we expect to update the notes over the summer, so they should be ready fairly soon.

Lord Skelmersdale: I am very grateful for that, and there are plenty of people outside who will be even more grateful.
	When defending the regulator's decision to insist on long cohorts, the Minister talks as if the more prudence that is used in deciding actuarial assumptions, the better. That is at least a familiar argument. The Pension Protection Fund, which I mentioned in my opening speech in the clause-stand-part debate, insists that pension schemes are overfunded to 140 per cent before they can be let off the major part of the levy, regardless of the possibility that overpaying into a fund by that margin might actively harm the future prospects of a company. The same applies in this case. An overly prudent set of assumptions will mean that the company and the contributors will have to pay higher contributions than is necessary.
	With no clear understanding of how a surplus is to be repaid, overpayment is most certainly not to the advantage of those involved. The question remains: who is the right person to look at each scheme individually and make a decision as to the correct set of assumptions that the trustees have made? I point out fairly forcefully that cohorts is only one of a number of assumptions that must be made on a case-by-case basis, using knowledge of the unique characteristics of the sponsoring company, the make-up of the contributors, and so on.
	I am glad to have the Minister's assurance, which I think I unravelled from his words, that the regulator will not enforce long cohorts. Have I got that right?

Lord McKenzie of Luton: I stress the point that issues of prudence are fundamentally a matter for the trustees, but the regulator clearly has a role, and it will be dealt with on a scheme-specific basis. You have to look at all the factors.

Lord Skelmersdale: That was not what I was asking. Was I right in understanding the Minister's assurance that the regulator will not enforce long cohorts? I am sure that I wrote it down correctly.

Lord McKenzie of Luton: Yes, the noble Lord is right in his understanding; that is what I said.

Lord Skelmersdale: That is extremely helpful. None the less, we believe that the regulator is not the correct answer. If we continue down this route, we will end up with a one-size-fits-all definition of what every pension scheme will look like. Moreover, as I said, direct benefit schemes will continue on their downward spiral. As I said at the beginning, I will take advice on this. But I would be fairly surprised if we did not come back to this issue on Report.

Clause 110 agreed to.

Lord McKenzie of Luton: moved Amendment No. 134C:
	After Clause 110, insert the following new Clause—
	"Delegation of powers by the Regulator
	(1) The Pensions Act 2004 (c. 35) is amended as follows.
	(2) In paragraph 21 of Schedule 1 (regulations relating to delegation of the Pensions Regulator's functions), for sub-paragraph (e) substitute—
	"(e) permitting the Regulator to authorise prescribed functions to be exercised on behalf of the Regulator by such persons, in such circumstances, and under such arrangements as the Regulator may determine."
	(3) Omit paragraph 28 of Schedule 1 to that Act (payment of expenses)."

Lord McKenzie of Luton: I shall speak also to government Amendments Nos. 141 and 141D. These amendments relate to the regulator's ability to contract out its functions. The Government are committed to ensuring value for money when planning and delivering large-scale public sector projects and to using the skills, expertise and capacity of the private sector where appropriate. The regulator currently has the ability to contract out functions under the Pensions Act 2004, which states that the Secretary of State may make regulations for the regulator to delegate prescribed functions to prescribed persons.
	The purpose of these amendments is to ensure that the Pensions Regulator has the flexibility to secure the best value for money if it decides to contract out any compliance functions. As the legislation currently stands, the regulator would have to identify preferred suppliers—the prescribed persons—to include in regulations before finalising contracts. In reality, the process of choosing the best functions to contract out, exploring the market for suppliers, identifying preferred bidders and then making a choice of supplier, requires careful planning. Amendments Nos. 134C and 141D will therefore place the emphasis on the prescribed functions that the regulator can contract out and remove the need to name the provider in the regulations.
	In practice, that will mean that the regulator can undertake a more flexible procurement process with potential suppliers, and therefore be better placed to identify the best value-for-money approach. Over time, it will also make it easier and simpler for the regulator to change suppliers, again making it more likely that the regulator will secure the best value for money. In addition, under Section 6 of the 2004 Act, the Pensions Regulator currently has the power to do anything which is,
	"calculated to facilitate the exercise of its functions",
	or is,
	"incidental or conducive to their exercise".
	That is subject to the provisions of Schedule 1 to the Act. Paragraph 28 of the schedule makes specific provision for the regulator to make payments for expenses and fees for advice, as the Secretary of State may determine.
	This provision was originally intended to enable the Secretary of State to set the limits within which the regulator would work. This power has never been used. We are therefore proposing, via Amendment No. 141, a repeal of this unnecessary provision, to ensure that there is no confusion about the regulator's ability to spend money on contracting out. As I said, we are committed to enabling the regulator to ensure value for money and to use private sector expertise where appropriate. I hope that noble Lords will feel able to support the amendments.

On Question, amendment agreed to.
	Clause 111 agreed to.
	[Amendment No. 135 had been withdrawn from the Marshalled List.]
	[Amendment No. 136 not moved.]
	[Amendment No. 136ZA had been withdrawn from the Marshalled List.]

Lord Fowler: moved Amendment No. 136ZB:
	After Clause 111, insert the following new Clause—
	"Parliamentary pension scheme member-nominated trustees
	(1) After section 241 of the Pensions Act 2004 (c. 35) (requirement for member-nominated trustees) insert—
	"241A Parliamentary pension scheme: member-nominated trustees
	(1) This section applies to a scheme which is set up under section 2 of the Parliamentary and other Pensions Act 1987 (power to provide for pensions for Members of the House of Commons etc).
	(2) The requirements of section 241 shall apply to the trustees of such a scheme subject to the following modifications.
	(3) Section 241(2) shall be read as if for paragraph (b) there were substituted—
	"(b) are selected as a result of a ballot in which all the eligible scheme members are given the opportunity to vote.""
	(2) Regulation 2(i) of the Occupational Pension Schemes (Member-nominated Trustees and Directors) Regulations 2006 (S.I. 2006/714) is revoked."

Lord Fowler: These amendments have been given some marvellous numbers. I declare an interest as a member of the Parliamentary Contributory Pension Fund.
	Parliament passes Bill after Bill on pensions. Since 1997, we have had the Welfare Reform and Pensions Bill, the Child Support, Pensions and Social Security Bill, the State Pension Credit Bill, the Income Tax (Earnings and Pensions) Bill, the Pensions Bill of 2003, the Armed Forces (Pensions and Compensation) Bill of 2003, the Pensions Bill of 2006 and the Pensions Bill that we are discussing today. As I think that list establishes, we are very willing to place obligations on other people and on outside schemes. Indeed, in an earlier intervention, the Minister talked on the vital role of trustees and the obligations that we place on them. But when it comes to the Parliamentary Contributory Pension Fund, we do not follow the rules laid down for others or for schemes in the outside world.
	I concede immediately that my mind and the minds of others have been concentrated by errors that the parliamentary fund has made concerning many members of the fund and their pensions. However, I do not want to detail all that in this debate. Suffice it to say that the pension fund made an error and that pensions have been paid incorrectly for several years to about 50 or 60 members. There has been an overpayment and a mistake concerning the guaranteed minimum pension. There is no dispute whatever that the parliamentary fund made the mistake. There is also no doubt that the error has led to financial demands to pay back and new reduced pensions.
	Although those errors are not insignificant factors, they have simply spurred this amendment. They are a part of that case, which will be decided in other ways, and I do not want to go into individual cases at this point. But I am told that the fund made the error because it relied on the advice of HM Revenue and Customs. One might think that the fund must have had its own skilled pensions advice available to it, but the truth is that it did not. I am told that, until very recently, the fund employed no professional pensions expertise. As extraordinary as it might seem, the fund was run by the Fees Office. As the Treasury took the view that the cost of professional pensions expertise was unnecessary, no such expertise was available. It is to the credit of the pension fund chairman and the other trustees that that position has changed. However, it has changed only recently.
	It is impossible not to come across further anomalies in the detail of the arrangements for the fund, including the arrangements for trustees, to which this amendment relates. As the Minister knows, the rules that generally apply mean that pension schemes have to ensure that at least one-third of trustees are nominated by the members. The trustees must make arrangements for the selection of member-nominated trustees, and there are a couple of stages to that appointment process. First, the trustees must ask at least the active and pensioner members for nominations. A member can nominate any other scheme member whom he believes is fit to act as a trustee of his scheme, and the nominated person must obviously give his consent. Next, the trustees have to decide on the selection process. Either a selection committee decides or, if a ballot is arranged, details of the nominated persons are put to all eligible scheme members. The members are asked to vote for whoever they believe is fit to act as a trustee. Those with the highest number of votes are thereby elected as member trustees.
	That is the general view. The Parliamentary Contributory Pension Fund, however, is one of a number of funds to which an exemption has been given. That should come as no surprise, because it relates to the purpose of my amendment. This fund is exempt from the trustee requirements of a normal pension scheme. No pension trustee is nominated, let alone elected, by the members. Trustees are, in effect, appointed by the House of Commons Whips—I was going to say the usual channels—whose pensions knowledge is encyclopaedic and renowned; it is only their vow of silence that prevents them holding forth on the technicalities of the guaranteed minimum pension and other such subjects. In so far as the trustees answer to anyone, they seem to answer to the Leader of the House, who may or may not have some knowledge of pension matters.

Lord Naseby: I declare an interest as a trustee. First, when I was appointed as a trustee in your Lordships' House, I was, to the best of my knowledge, appointed by the usual channels in this House, not the usual channels in the other place. Secondly, those who have most recently been appointed as trustees have had the most experience of pension funds. So although my noble friend is correct to say that such experience did not previously seem to be a requisite, the position has changed more recently.

Lord Fowler: I welcome my noble friend to the debate. He is indeed a trustee, and he is one of the exceptions among the 10 members of the trustee board. All the others, with the exception of Sir Graham Bright, are Members of the House of Commons. I exempt my noble friend from what I said about appointment through the usual channels in the House of Commons; he has obviously been appointed through the usual channels in the House of Lords. If that satisfies him, I am very happy to make the correction. But the point is that he was appointed. The point that I am making is that the conditions that apply to other pension schemes should apply also to our own pension fund.

Lord Naseby: My noble friend may well have his viewpoint, which many of us may share, but I would simply re-emphasise that I was appointed solely because I had been a trustee for a normal pension scheme which was certainly regimented. Although one of my noble friends shakes his head—he was, of course, at the Welsh Office when the Welsh Development Agency ran into trouble—that experience seemed relevant.

Lord Fowler: My noble friend seems to be extending the debate. If I may advise him, I would say that that is not necessarily totally in his interests. He may well have been a trustee of another pension scheme; it is not exactly a unique qualification in this House. I am taking it from the point of view of members of the scheme. The trustees are there to represent the members, so they should have the right to choose a certain proportion of them. I am not making a case against the present trustees; I have been careful not to do so. I strongly advise my noble friend not to provoke me or I may go down a rather different road.
	My amendment proposes that at least one-third of the trustees should be not only nominated by the members but elected by them. If they were able only to nominate them, that would bring us back to the current position. Election is the proper way of doing it. The current position is that eight of the 10 trustees are serving Members of Parliament, appointed by the Whips; one, as we heard, is a Member of this House, appointed by the Whips here; and one has been nominated by the association representing former Members of Parliament—a step taken only recently, though it is a step. All of them are members of the scheme; there is no independent member of any kind on the trustee board. In other words, there is no truly independent member and no independent chairman. I emphasise that this is not a criticism of the current chairman, who has done a great deal to try to rectify some of the faults in the present system. I pay tribute to Sir John Butterfill for that. However, there is no independence.
	I simply do not believe that anyone can seriously claim that this is a perfect position for a pension fund to be in, let alone a parliamentary pension fund, given all the requirements and conditions that we place on other pension funds. We debate and enact Bill after Bill to place conditions, restrictions and rules on outside pension schemes, yet we have a parliamentary pension scheme system that is antiquated and unreformed. I cannot imagine why we think that reform is right for outside schemes but not applicable to our inside parliamentary scheme. Why do we think it right to enact Bill after Bill that applies outside but not to us?
	I should be grateful for the Minister's guidance, because we are in a pretty technical area and I do not want to table an amendment that does not bring into effect the purpose behind it. I have tried to remove the exemption for the parliamentary pension fund which exists under current law, and impose the requirement that at least one-third of pension trustees should be elected by members of the pension fund. That is my case, which is exploratory at this stage. I am anxious to find out whether the amendment serves the purpose that I have set out. If it does not, we have time to change it before Report stage. The Treasury is at the centre of these arrangements; it rules rather than the trustees. I would like to find out how it sees or defends a position that many in this country regard as out of date. I beg to move.

Lord Crickhowell: In making my first intervention on this Bill, I declare an interest as one of those who was affected by the errors described by my noble friend. I emphasise, too, that the present chairman of the parliamentary pension fund has made strenuous efforts in recent times to improve the management arrangements. It was extraordinary that the Fees Office had no professional expertise, that the advice received from both the National Insurance Contributions Office and HMRC was wrong and that the errors were not spotted by the Government Actuary or the National Audit Office.
	One of the consequences is that the 177 pensioners who were overpaid and the 100 who were underpaid have probably been dealt with less generously than they would have been in a private pension scheme. I feel pretty sure that, in the days when I was a trustee of private pension schemes, with an error of this kind, whose net cost was not substantial after taking account of tax implications and so on and which had occurred because of the lack of professional expertise provided by the employer and the actuary not having done his job properly, most employers would have covered the costs rather than expecting pensioners to repay overpayments at a time that was extremely painful for them to do so.
	I need not go further on those matters, except to take up some of the lessons that I think were learnt from what happened after the errors had been discovered. The trouble was that there was no representative group of pensioners to whom advice could be sought or with whom consultations could take place. There were consultations involving the Leader of the House of Commons and an effort was made to bring in the Association of Former Members of Parliament. However, the association was set up relatively recently, after these errors occurred, and I have to confess that I did not know of its existence. It certainly has no specific pension role and cannot be taken to be representative of pensioners.
	When I was last a pension trustee in a firm of which I was a director, we had elected pension trustees and we made a point of having an annual meeting to which pensioners could come to cross-examine the trustees and to receive advice about the way in which their pension fund was being managed, the investments were being made and so on. There was always a good attendance at those meetings.
	When this episode occurred, no such meeting was convened. I first heard about it when I received a letter saying that my pension would be reduced the following month and that I would be asked to repay a quite substantial sum over the next five years. There were no detailed discussions to explain what had gone on. We then had to seek advice. I sought advice from, among others, the Pensions Advisory Service; my noble friend has read out from the advice the normal way of dealing with these things in private schemes.
	It is entirely wrong that the parliamentary scheme should be living in the dark ages of pensions representation and administration in this way. It should set an example and give a lead; it should not have to defend the indefensible. Surely pensioners receiving benefits from the parliamentary pension scheme are entitled to be fully and adequately represented by people whom they have helped to choose. They should have the opportunity to nominate and, preferably, to vote on those people; they should not simply be represented by people who, however honourable and whatever efforts they may put into their work, are not chosen representatives.
	I warmly welcome the proposals made by my noble friend to bring the parliamentary pension scheme into the modern age. They would make sure that the scheme is properly run and that the representatives of the pensioners are chosen in the way that is considered appropriate for all other pension schemes today. Anything else is indefensible. If the Minister has to say that there is a fault in the detailed proposals that my noble friend has put forward, I hope that he will come up with a solution that offers the members of the parliamentary pension scheme the kind of representation that they should have and which they probably could have if they were members of any other scheme operating under normal rules.

Lord McKenzie of Luton: I should start by declaring an interest as a very modest member of the scheme. I thank the noble Lord for this amendment and for raising this important issue. I do not have any details in my brief about the background to the errors, how they arose and what was entailed, but I can see that there may be a way of taking this matter forward.
	The Pensions Act 2004 requires occupational pension schemes established under a trust to have arrangements in place that provide for at least one-third of its trustees to be member nominated. However, as I am sure Members of the Committee will be aware, and as has been explained, the parliamentary pension scheme is covered by separate statutory provisions in the Parliamentary Pensions (Consolidation and Amendment) Regulations 1993. Therefore, the parliamentary pension scheme is exempt from the 2004 requirements.
	As the noble Lord explained, his amendment would revoke this exemption and modify the requirement so that member-nominated trustees of the parliamentary pension scheme would be selected by a ballot of scheme members, rather than selected as a result of a process that involves some or all of the members as per the Pensions Act requirement. The existing provisions in the parliamentary pensions regulations arguably provide for greater involvement by members of the parliamentary pension scheme than those provided under the Pensions Act 2004. The parliamentary pensions regulations require all the trustees to be either Members of another place or former Members who are entitled to a pension from the scheme.
	The particular point raised was that nominations are usually made through the usual channels. Last year, an appointment was made following a nomination by the Association of Former Members of Parliament. Sir Graham Bright was my old adversary in Luton South; he saw me off twice, regrettably, in 1987 and 1992, but I do not hold that against him. Appointments are made by order of the House of Commons. Members of another place may therefore effectively veto any appointments. I think that Members of the Committee will agree that, because there are separate statutory provisions, it serves no particular purpose to seek to apply the member-nominated trustee requirements in the Pensions Act 2004, which could create an unnecessary legislative complication.
	If the noble Lord believes, as he clearly does, that aspects of the member-nominated provisions should be reflected in the parliamentary scheme regulations, perhaps the route forward is to seek to take them up first by making representations to the Leader of the House of Commons, who is responsible for those regulations. I am sure that the noble Lord, with his experience and standing, would be able to effect those arrangements and I would be very happy to work alongside him to do that.

Lord Crickhowell: There is a difficulty, of course, if this is done by changes in the regulations. Apart from anything else, if the new regulations came before this House, we would have no scope for amending them. We would have to take them as they stand. There are some difficulties in proceeding by that route.

Lord McKenzie of Luton: At this stage, I am suggesting that, if the noble Lord feels able not to press his amendment, perhaps the first thing to do would be to see whether there could be some engagement with the Leader of the other place to raise these issues more directly. The noble Lord may be aware that a review of the parliamentary pension arrangements is in hand. The Leader in another place announced in a Written Ministerial Statement on 17 June—this was particularly because of the anticipated increase in the cost of benefits accruing under the parliamentary pension arrangements—that the Government would shortly be asking the Senior Salaries Review Body to undertake a major review of those arrangements. The review will need to consider among other things the findings of the Government Actuary's valuation of the parliamentary contributory pension fund, which is to be completed in March 2009. It will perhaps be spring 2010 before the SSRB reports.

Lord Naseby: Speaking as a trustee, I know that one of the frustrations of the current trustees is the slow response that representations from trustees receive from the Leader of the House of Commons. While that route may or may not be appropriate, the speed of response is not acceptable. The Minister mentioned the Government Actuary's assessment of the value of the fund, which is quite right. But it is now July 2008 and, as I understand it, the assessment will not be completed until March 2009 at best. Those time spans are detrimental to the trustees taking forward decisions. Perhaps my noble friend who tabled the amendments will remember that the current foundations were passed in 1993 when, if I remember correctly, a Conservative Government were in power. I am not sure whether both my noble friends were members of the Government at that time.

Lord McKenzie of Luton: I certainly remember 1993 and the Conservative Government.

Lord Fowler: Let us cut out this ridiculous nonsense about whether it was a Conservative Government or a Labour Government. It is the first time that that has been introduced and it is a completely trivial point.
	The Minister referred to the Senior Salaries Review Body review, but surely that will not look at the structure of the scheme. It might consider the benefits and so on, but it is not going to look at the structure. It seems rather unnecessary—and, frankly, not relevant—to wait until it has reported. I cannot see what I am waiting for.

Lord McKenzie of Luton: That is the point that I was going to make. I am a little unclear as to the remit of the SSRB, but I accept that it is more likely to be focused on benefit levels and financial arrangements than on the structure of the scheme.

Lord Fowler: The Minister has made a good offer—although it is slightly qualified by what the noble Lord, Lord Naseby, said—about having talks with the Leader of the House or making representations, however one wants to put it. Perhaps I could meet him, as a Treasury Minister, to express some of our reservations. That could perhaps run in tandem.

Lord McKenzie of Luton: I am happy to be involved in that. I should stress that I speak as a DWP Minister these days; I used to do Treasury stuff in the Whips' Office. I am sure that we can get the right officials around the table to explore these issues in more detail. Obviously it is outside my power to say how this matter might be taken forward but, given the concerns expressed, that would be a good first step. I am happy to commit to that, to facilitate engagement with the Leader of the House of Commons and, if communications have not been speedy enough in the past, to see what we can do to move them forward. I do not know where this might head at the end of the day—I cannot commit to that—but there is a real issue and I am happy to commit to working with noble Lords to see what movement we may be able to make. That is as far as I am able to go today.

Lord Fowler: I am grateful. I should say to the noble Lord, Lord Naseby, that I am extremely grateful for his contribution. It was no part of my intention to fall out with him, with the present trustees or with the chairman. I went out of my way, I hope, in my opening remarks to pay tribute particularly to the chairman. What my noble friend and I have been saying on the individual case is exactly the initial position of the trustees themselves. We are not concerned about individuals; we are concerned about the structure and about Parliament setting down regulations, rules and restrictions that apply to everyone else but, when it comes to its own scheme, saying that that would be going far too far. The answer to whether it was 1993, 1983 or 1973 is that the whole thing has moved on and we are getting into a much more modern and sensible pension structure. That is why the scheme should be looked at.
	I am grateful for the manner in which the Minister has replied. My colleagues and I shall certainly take up the offer that he has made that, perhaps simultaneously, we should talk to the Leader of the House and, through his good offices, to Ministers on a way forward. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clauses 112 to 114 agreed to.

Lord McKenzie of Luton: moved Amendment No. 136A:
	After Clause 114, insert the following new Clause—
	"Disclosure of information relating to state pension credit recipients
	(1) The Secretary of State may by regulations make provision authorising the Secretary of State, or a person providing services to the Secretary of State, to supply relevant persons with social security information about persons in receipt of state pension credit.
	(2) In this section "relevant person" means—
	(a) a person who holds a licence under section 6(1)(d) of the Electricity Act 1989 (c. 29) or section 7A(1) of the Gas Act 1986 (c. 44) (supply of electricity or gas to premises), or(b) a person providing services to the Secretary of State or to a person within paragraph (a).
	(3) Regulations under this section must specify the purposes for which information may be supplied by virtue of subsection (1), which must be purposes in connection with enabling the provision of assistance to persons in receipt of state pension credit.
	(4) Regulations under this section may authorise the supply of information by a relevant person to the Secretary of State or another relevant person—
	(a) for the purpose of determining what information is to be supplied by virtue of subsection (1), or(b) to enable information supplied to a relevant person by virtue of subsection (1) to be used by that or another relevant person for purposes within subsection (3).
	(5) Regulations under this section may—
	(a) make provision as to the use or disclosure of information supplied under the regulations (including provision creating criminal offences);(b) provide for the recovery by the Secretary of State of costs incurred in connection with the supply or use of information under the regulations.
	(6) In this section—
	"social security information" means information held by or on behalf of the Secretary of State and obtained as a result of, or for the purpose of, the exercise of the Secretary of State's functions in relation to social security;
	"state pension credit" has the meaning given by section 1(1) of the State Pension Credit Act 2002 (c. 16)."

Lord McKenzie of Luton: I shall speak also to Amendment No. 141E. Amendment No. 136A would allow the Secretary of State to make regulations to share data on pension credit recipients with energy suppliers. It also allows energy suppliers to share customer data in order to identify people to whom they can provide assistance with the cost of their fuel bills. These powers would come into force on Royal Assent so that the required regulations can be introduced soon after. These regulations will be subject to full parliamentary scrutiny.
	Energy supply companies have, for some time, been asking for the Government to provide them with benefits data to enable them to target their social offerings on the people who most need them. Recently, Sam Laidlaw, the chief executive of Centrica, said in an Energy Select Committee debate on 24 June:
	"What we have been keen to do with DWP is match our computer systems with their computer systems, to ensure that we really have good targeting".
	The Government have been keen to respond to that call.
	We recognise that this is an important new step in the use of government information. The amendment would legitimise for the first time the supply of DWP information to multiple private commercial bodies. The Government recognise that this naturally gives rise to concern and I can assure noble Lords that we have not acted hastily. We have involved all the major stakeholders and have their support. The Fuel Poverty Advisory Group has strongly advocated the sharing of government data with energy suppliers. We have also gained support for a beneficial data share from organisations representing older people such as Help the Aged, Age Concern and the CAB, and from those representing energy consumers such as energywatch, National Energy Action and uSwitch. They recognise that the sharing of government data is not to be taken lightly but, on balance, welcome this as an important development in getting to people direct help with their fuel bills.
	In addition to the legal safeguards already available through the Data Protection Act 1998, the amendment allows the Secretary of State to provide in regulations for a new criminal offence to penalise anyone who unlawfully discloses these data. We have also involved the Information Commissioner in our proposals and we will continue to work closely with his office on the detail to ensure that all practices are fully compliant with the highest standards of data handling, including their security.
	We will be working closely with energy suppliers, BERR and Defra over the coming months to ensure the detail of the use of the data and to make sure these agreements are sound and enforceable. We say to energy suppliers that it is up to them to make this work and we have started discussions with them on the detail of their offer of assistance to pension credit recipients. It may reassure noble Lords that we will share our customers' information only when we are satisfied that what is on offer from the energy suppliers is good enough to warrant data-sharing. The offer must be proportionate and customers must be offered a guaranteed benefit. We recognise there may be some concerns that once the suppliers have the information, they may use it for purposes other than awarding help with fuel costs, but each supplier will receive data only on their existing customers and these data may be used only for purposes in connection with enabling the provision of assistance to persons in receipt of state pension credit. Noble Lords will remember that last year the Government secured, by voluntary agreement, extra spending from energy suppliers to help vulnerable groups. This amendment builds on that and allows energy suppliers to identify and offer help with fuel bills to some of the poorest pensioners. I beg to move.

Lord Skelmersdale: The Minister's amendment to this Bill has, to a certain extent, been foreshadowed by an amendment tabled by my noble friend Lord Jenkin of Roding to the Energy Bill on 1 July relating to the sharing of information with the energy companies to help them identify those vulnerable to fuel poverty. The Minister has explained the predicament. In responding to my noble friend's amendment then, the noble Lord, Lord Bach, quite rightly talked at length about the difficulty of ensuring that information was kept secure, and I would certainly agree with him on that. He noted the legitimate privacy and data protection concerns and pointed out:
	"We must be sure that any sensitive information being shared can deliver the outcomes that we are looking for, is appropriately protected because the safeguards are in place and can be delivered in a way that is consistent with data protection and human rights legislation".
	All of this I fully agree with. The information we are talking about sharing is intensely personal. To hand over private financial information without the proper safeguards would be worse than irresponsible. That the information is a marker of poverty makes it yet more sensitive. How many more pensioners—the whole exercise is not about pensioners per se—would choose to suffer rather than accept state handouts if they were not completely confident that such a step would remain confidential? The Minister might incidentally balk at the word "handouts" but I have used it and I will stick by it.
	The Government's promise two weeks ago that they,
	"will continue to keep the case for large-scale legislative data-sharing provision under close consideration",
	would be more reassuring if it was not clear that pension credit information is being used as a pilot test for all this. The noble Lord, Lord Bach, stated:
	"The precise details of future arrangements are still being considered and discussed with supplier companies".
	He continued:
	"The amendment to the Pensions Bill is an important start, and we will learn lessons from it to help inform further work".—[Official Report, 1/7/08; col. GC 43-45.]
	We cannot accept that pensioners are going to be made guinea pigs in this exercise. Can the Minister explain why the Government have decided to treat pensioners like what one of my noble friends recently described as a canary down a coal mine? They are proceeding with this amendment and have announced their intention to implement a policy of sharing sensitive information when they have admitted that the entire process has not been fully thought through and the safeguards they know are necessary have not been finalised. Either the Government have done the necessary groundwork and my noble friend's amendment is perfectly reasonable and proportionate—although clearly the noble Lord's colleague thought not—or much more work must be done before any data-sharing can be thought of.
	The noble Lord said that the information of fuel companies must be "good enough". I should be extremely grateful if he could expand on that rather remarkable statement. In the way that he said it, I found it not exactly readily explicable. Does the Minister not consider a more responsible way forward would be to establish how a power was going to be used before coming to Parliament and demanding it? Before he responds, I suggest to him that using the word "flexible" when talking about what he considers to be acceptable standards of safety would not be appropriate.

Lord Kirkwood of Kirkhope: I have a brief contribution to make on this important change being introduced by the Government. First, I assume from the way in which the Minister introduced the amendment that the regulations that will flow as a consequence will be affirmative and not negative. I see him nodding, which is a comfort, because it is important for Parliament to be careful about how this power is used. I am in favour of data-sharing, and very much in favour of using the technology sensitively to produce better services for our most financially disadvantaged families.
	There is an issue of consent here, which slightly troubles me, because I know from previous experience that a number of pensioner householders in this country do not want to apply for pension credit. They do not want to become involved in the system at all as a matter of principle. Those who do want to become involved in it still consider it, rightly or wrongly, to have a stigma attached to it. When the Government and the electricity and gas-supplying authorities get together to share this information, they must be very careful about how they use it, because they are using it without consent. I guess it is impossible to acquire the consent of everyone involved and to be able to take advantage of some of the consequences that might flow from it. However, we must be very careful about consent as we go down this route.
	This issue will probably expand, rather than contract, in the way in which the Government interface with financially disadvantaged households. I am keen to hear more about how the Government will handle informed consent, and I will certainly raise the matter in proceedings on any affirmative regulations that come before the House as a result of this amendment to the primary legislation.
	The issue of fuel poverty is hugely important now. We are living at a time when energy prices will stay high. They may not all be in the $150-per-barrel league, but we are far removed from $30 a barrel and are not going back to it—of that I am absolutely certain. The Government must therefore do everything that they can to anticipate the hardship that is an inevitable consequence for disadvantaged households in this country. Fuel poverty will become even worse because the economy will, at least in the immediate future, see something of a downturn. For all these reasons, urgent action needs to be taken.
	If this all works, and if everything that can go right does go right, we may end up with a two-way dialogue that gives information back to the DWP and that informs it, perhaps for the first time, that things are much worse in some of these households than it currently imagines. The Government cannot simply say that it is for the electricity and gas-supply industries to deal with the consequences, although there are lots of important things that can be addressed, such as metering and the unfair treatment of people who pay cash and do not have debit cards or pay by direct debit. We all know about this. Some issues have been on the stocks for many years that need actively to be resolved. Surely the DWP must accept some responsibility if the flow of information that starts as a result of this amendment throws up new situations. It should be big enough to stand behind that change, recognise that it is a valuable improvement and come to the table with some financial improvements that will deal with some of its consequences.

Lord Mogg: It may be a little surprising that I enter for the first time into such a dramatic Bill as this, but declaring my interest as the chairman of Ofgem, the energy regulator, may explain my interest in the debate. It might be useful to give notably the noble Lord, Lord Skelmersdale, a little of the background to this welcome proposal, introduced by the noble Lord, Lord McKenzie.
	The authority, which I chair, is under statutory guidance, issued by Parliament, to pay particular attention to fuel poverty. That measure was introduced several years ago. The problem is now reaching crisis proportions because of existing and anticipated price rises; the newspapers speak of very high percentage increases over the next few months. My concern as the authority chair, and as an individual, is to act under the authority's responsibilities. Fuel poverty is of profound importance in dealing with such a large population in their day-to-day activities. I should draw the attention of the noble Lord, Lord Skelmersdale, to the fact that pensioners over the age of 60 represent 50 per cent of those in fuel poverty in this country.

Lord Skelmersdale: I was pointing out that fuel poverty affects a much wider group than pensioners alone.

Lord Mogg: I am grateful for that intervention and will come to it at the end of my contribution. What will the Government do for people in fuel poverty? It is such a huge problem; we estimate that 3.5 million to 4 million households are already affected, and the figure could go up to 5 million. Among those affected are single occupancy households and really quite poor pensioners, and I do not forget single mothers, the disabled and the disadvantaged. My question to the Minister is: what do the Government intend doing to make similar provisions? This assumes a satisfactory negotiation of the regulations, which we will come to in relation to this Bill. Can the Minister give a clear indication that all the extra money provided "voluntarily" during the last Budget will not be absorbed by this particular group, important though it is?
	I now give some background. It was interesting that the Minister did not mention my own organisation, Ofgem, the gas and electricity markets authority. In April it held a fuel poverty summit, which I chaired. The important point is not that I chaired it but that there were five Ministers present, including one from Wales, two Secretaries of State and five of the six major energy suppliers. Of even greater significance, the front-line agencies that deal with this issue face to face were present. They had seen the worst of the issue and the breadth of the problems. All sides of the argument were in the room. The purpose of the summit was, not to tell the Government to supply more money, although my authority has been among those saying that, because fuel poverty is of such importance; rather, it was to say, crudely, let us try to get the best bang for the bucks, and to ensure that the money already in the system—both from the Government and others—is best used and targeted, and that the people who need it most are identified.
	From the summit, a few weeks later, a fuel action plan, involving all parties, was produced to try to tackle this—I will not burden your Lordships with the range of issues raised. I underline with passion—if I may use the word in this House—that it is important that this is dealt with now and in the future. What came very clearly out of the discussions was the need for government help in this area. While I understand the concern of the noble Lord, Lord Skelmersdale over the remaining half, it was vital that for the first time the Government were willing to address the problem of using the resources and information they have properly protected—an important point, again, to which I will come—for dealing with this.
	I draw noble Lords' attention to Age Concern's analysis; it gives a cautious welcome to the measure, precisely because of the DWP data that will help energy suppliers to identify those most in need, rather than the scattergun approach that tends to be taken. I hope all sides supported rapid progress with the measure. I pay tribute to Mr O'Brien for the measure he took and the speed with which he seized the opportunity to use this, if I may say so, slow-moving legislation to open a door that had been bolted as a policy issue and a methodology. What we need, of course, are regulations, hence the Bill. These are of central importance to identify who will be targeted—I understand that it is to be the over-70s on benefits, or perhaps an even older group. The figures are large even on that basis. Moreover, the data security will be protected not only from the Government's point of view, but also from that of suppliers, because they will use the information to identify their customers in order that the two sides can meet.
	Thirdly, on how this system would operate in practice, I understand very well the concerns of noble Lords opposite about possible abuses. Indeed, in the past the Government have had one or two problems in this area. I am grateful for the confidence shown in my own organisation when it was suggested that it should be the intermediary between the two—the trusted third party to manage the process. I think I have convinced the Government that we are not the right body because we are not experienced in large data manipulation, but it is important that there should be a trusted intermediary capable of managing large amounts of data. That is not unusual; many organisations have such experience.
	The other aspect referred to by the noble Lord, Lord McKenzie, in moving the amendment is how suppliers will use this information. Perhaps I may deal with one or two of the points made earlier by other noble Lords. It is thought that everyone will somehow have their privacy invaded without their knowledge. That is not the intention; rather it is that individuals will have an opportunity to pursue the issue. They will be identified for the energy company if they agree to that; they will not be forced into it. The Age Concern data I have referred to emphasises that that should be of prime concern, and I agree. Elderly people need an explanation of what they are letting themselves in for. They need to be able to trust these companies, and in turn the companies need to be well aware that they must maintain the data properly. So it is not a scatter-gun approach that takes in everybody over a certain amount. It concerns only pensioners in receipt of pension credit who wish to benefit from this provision. Furthermore, the data will be handled carefully. However, the detail set out in regulations will be vital. There can be no confidence in a system that does not meet data privacy concerns, and it is essential that both the Government and companies have an agree on data privacy not only on the part of the companies but also by Government is essential and should be of reassurance to earlier contributors to the debate.
	I turn now to the other 50 per cent of people whom my noble friend was concerned about. To think that only old people face problems is quite wrong; there are dreadful problems if you have to use 10 per cent of your income to pay for heat and other appliances. This is clearly of grave concern; hence, my question to the Minister to encourage clarity on these issues: what next? If a satisfactory arrangement is worked out and a fuel company clearly identifies what it intends to do with the information, we must ensure that those not included in the Bill are still dealt with.
	The agreement announced recently in the Budget indicated that there would be an extra £225 million from the fuel suppliers over the next three years, an increase from £50 million a year to £150 million a year on social measures. That is to be welcomed, although almost all of it has probably been absorbed by recent price increases, while the anticipated further price rises make the problem even more difficult to deal with, and even more important. Perhaps the Minister could indicate, as I will, that fuel companies are not constrained by the £225 million. It is not a cap but an opportunity to develop still further. Their record is good, in my view, and they have tended to receive less credit than they deserve. Appeals to them to be more targeted in their advice have now also been honoured, and the challenge is also to the energy companies. If we have a problem that is not solved by further, long consideration of this Bill, I think that it will be regretted.
	I have one final, small point on the proposed new clause. A figure in its subsection (5)(b) refers to costs. Your Lordships may think it so particular that it need not be mentioned. The Secretary of State is, understandably, given the power to recover the costs. In fact, although as a non-lawyer I hesitate to enter this fray, the words could also be construed as implying that suppliers could, in some way, have their costs introduced. I mention that because, while the Government understandably need to finance their activities, the last thing that an elderly or disabled person in fuel poverty would want to read is that the sum of money devoted to social initiatives will drain away into costs. Some clear indication at a later stage, perhaps on Report, that this measure will be as cost-constrained and developed as it can be would be helpful. I support the amendment.

Lord McKenzie of Luton: I thank all noble Lords who have spoken in this debate, particularly those who have supported the amendment and done so enthusiastically. I will seek to respond first to the noble Lord, Lord Mogg, who made a powerful intervention on this issue. I should place on record our thanks for his engagement in the fuel poverty agenda and for working with fellow Ministers. He made it clear, as others have, that pensioners in fuel poverty is just part of the issue. There are many others whom we need to support and help as well. The noble Lord referred to the process as slow-moving, but I am pleased that my colleague Mike O'Brien has fully engaged with it and really helped to move it on: he is extremely committed to that.
	It is my understanding that the noble Lord is also right on the fuel companies not being constrained by the figure of £225 million. If they wish to double it, or even do a bit more, the Government and those in fuel poverty would be delighted. He also makes an important point about the costs: we need to be clear on them. I think that the costs referred to here are those of dealing with the information exchange, but the noble Lord is absolutely right that we need to be clear who will bear those. We do not want those in fuel poverty to have to bear those costs.
	Regarding those other than pensioners, the noble Lord asked "What next?". I will probably write with more detail on that, as today I have before me the issues on pensions and pensioner credit. A point that arose from discussing the Energy Bill is that, unless data-sharing measures are quite targeted, you run the risk of falling foul of data-sharing legislation, which is why there is a clear nexus between outcomes for those on pension credit and fuel poverty. Applying that to other groups needs more thought and discussion.
	The noble Lord, Lord Skelmersdale, asked what I meant by, as I think he said it, information from energy suppliers being good enough to warrant data sharing. We need to be satisfied that what is on offer from energy suppliers is good enough to warrant data sharing. Obviously, how energy companies deploy the resources that they have voluntarily agreed to make available is, ultimately, up to them. If they chose to make only a portion of that available through this process, we would need to judge whether it is therefore right in those circumstances still to share information and go forward with these provisions. I was trying to make that point.
	The noble Lord rather unfairly asked why we were treating pensioners as guinea pigs. That is not the case at all. We are taking powers now as we have a legislative opportunity to do so. A lot more work is needed to put them into effect, but there is a clearly identifiable group of people whom we can support if they are fuel poor, and it is right that we should do so.

Lord Skelmersdale: The Minister accuses me of unfair criticism. What lay behind my thought was that there will be a welfare Bill next year, as he well knows. Given that there is a lot of discussion going on in all this, when the data-sharing measure is introduced, for this specific, correct and reasonable reason, it should be applied to everyone in fuel poverty, not just pensioners.

Lord McKenzie of Luton: I acknowledge that concern, but the starting point—and this came up in the energy debate—is that to be able to share information in this way, a clear nexus is needed between outcomes for the range of data being shared and the input to those data. Those in receipt of pension credit aged 70 are a clearly identifiable group of people. It is much more difficult to so readily identify a range of other people who are in fuel poverty. That is work in progress, and discussions are proceeding on it. That should not prevent us from moving ahead where we can, and we need to do so quickly, as the noble Lord, Lord Mogg, said.

Lord Mogg: The question posed by the noble Lord is a good one. The mention of that Bill suggests that it is a useful vehicle for those remaining, to the extent that they are covered, but perhaps the Minister will agree that this means the regulations to bring this measure forward even faster can be got on to the statute book. As it is, if your Lordships agree and the Bill passes, it will still be another year before the Bill can be applied, so the noble Lord is correct in his implied conclusion.

Lord McKenzie of Luton: I thank the noble Lord for that intervention. I want to be clear with regard to data sharing, about which there was some difficulty in the Energy Bill. Essentially, data sharing needs to be proportionate; that is, there needs to be a beneficial outcome for the great majority of those whose data are shared, and one that as far as possible is awarded automatically. That is why we can proceed with this—we have the opportunity to do so. If we have a welfare reform Bill next year, we will have another opportunity to do more.
	The noble Lord, Lord Kirkwood, said that the Government were passing the buck to energy suppliers. I do not agree at all. There is a range of issues on which the Government are playing a direct part—I will not go through the whole list; the noble Lord is very familiar with them—regarding winter fuel payments, but this is an opportunity to work with the suppliers and we shall be grateful for the role they will play.
	The noble Lord also touched upon the important issue of consent. A potential opt-out is being considered and worked through, and it would help to address that issue.
	Data security is vital; it is at the heart of ensuring that the system works as we would want it to. The noble Lord, Lord Skelmersdale, asked how the power will be used. The Bill specifies that it may be used only for the benefit of people on pension credits; regulations will have to work within that and other legal frameworks.
	I hope that that has dealt with the range of points raised. This is an important issue. I am grateful for the support of noble Lords. We need to move ahead with this and then do more at subsequent opportunities.

On Question, amendment agreed to.

Lord McKenzie of Luton: moved Amendment No. 136AA:
	After Clause 114, insert the following new Clause—
	"Pre-1948 insurance affecting German pension entitlement
	(1) This section applies where the conditions in subsections (2) and (3) are satisfied.
	(2) The first condition is satisfied if it appears to the Secretary of State that a person (the "pensioner") is, or was immediately before death, a person—
	(a) whose German pension entitlement is (or was) reduced by one or more periods of pre-1948 insurance, or(b) who would have (or would have had) a German pension entitlement, but for one or more periods of pre-1948 insurance.
	(3) The second condition is satisfied if—
	(a) the insured person entered the United Kingdom as an unaccompanied child directly or indirectly from Germany, Austria, Czechoslovakia or Poland in the period beginning with 2nd December 1938 and ending with 31st May 1940, or(b) the Secretary of State otherwise considers it appropriate to give a direction under subsection (4).
	(4) At the request of the pensioner or (where the pensioner is dead) any other person claiming to be affected, the Secretary of State may direct that, on the giving of the direction, subsection (5) takes effect in relation to the period or periods of pre-1948 insurance.
	(5) On this subsection taking effect in relation to any period—
	(a) the insured person is deemed not to have been, not to have been deemed to be, and not to have been treated as being, insured for that period under the Widows', Orphans' and Old Age Contributory Pensions Acts 1936 to 1941 or under any provision of Northern Ireland legislation corresponding to those Acts, and(b) any contribution mentioned in section (Pre-1948 insurance: supplementary)(2)(b) or (c) is deemed not to have been credited to the insured person.
	(6) The Secretary of State may give directions specifying how any request for the purposes of subsection (4) must be made.
	(7) Where subsection (5) has taken effect in relation to a period or periods of pre-1948 insurance, the relevant authority may pay to any person an amount not exceeding any amount that would, but for subsection (5), have been payable to that person in respect of—
	(a) a benefit specified in section 20(1) of the Social Security Contributions and Benefits Act 1992 (c. 4) (contributory benefits), or(b) a benefit specified in any provision of Northern Ireland legislation corresponding to that provision.
	(8) In this section—
	"child" means a person aged under 18;
	"German pension entitlement" means entitlement to benefits arising under insurance with the Deutsche Rentenversicherung, or any other entitlement that appears to the Secretary of State to be relevant for the purposes of this section;
	"insured person" is to be read in accordance with section (Pre-1948 insurance: supplementary);
	the "relevant authority" means—
	(a) in relation to a benefit within subsection (7)(b), the Department for Social Development in Northern Ireland;(b) in any other case, the Secretary of State;
	"unaccompanied" means unaccompanied by an adult family member."

Lord McKenzie of Luton: I wish to speak also to government Amendments Nos. 136AB, 141F, 141G, 142CA and 142CB. The purpose of these amendments is to remove an anomaly that has arisen as a result of the interaction between the pre-Beveridge UK pension arrangements, European Community law and German pension provision. These amendments seek to help individuals who came to the UK as children to escape the Nazi persecution in their home countries between 2 December 1938 and 31 May 1940. This operation became known as Kindertransport.
	There is no question but that coming to Britain was the best outcome for these children, but there was a tremendous variation in the fortunes of those who came. Some had benefactors who ensured that they received an excellent education and every advantage. Others were less lucky and were obliged to work in manual jobs straightaway, or as soon as they reached minimum school leaving age. Only the latter group would have been insured under the social insurance scheme as it existed before Beveridge's reforms took effect in 1948. People insured under the old scheme were credited into the new national insurance scheme at that time and thereby have rights in the present UK state pension scheme.
	For most people this made little or no difference; for a minority it was advantageous. However, uniquely for certain of the Kindertransportees it transpired to be disadvantageous. When Germany opened its state pension schemes to the Kindertransportees in the early 1990s, some of them opted to take back their German nationality and to pay a voluntary contribution to join one of the schemes. These people were credited with German contributions for the period from 1939 to 1949. Those in manual occupations found that, under European Community regulations designed to prevent duplication of provision in the case of cross-border workers, their pre-1948 UK credits took precedence over the German credits, resulting in a reduced or, depending on their age, significantly reduced German pension. By way of comparison, those Kindertransportees who were not insured under the pre-1948 arrangement in the UK because they were in education or salaried non-insured occupations at the time were able to gain the full value of their German credits for this period. Understandably, the Kindertransportees were, and remain, much aggrieved by this disparity of treatment.
	These amendments enable a Kindertransportee who has a German pension entitlement that is reduced or extinguished by a period of pre-1948 insurance to request that they are deemed not to have had such insurance. I believe that it is right that we should seek to remedy this unfairness. I beg to move.

Lord Skelmersdale: This is an eminently sensible and long overdue amendment. For a Pensions Bill, this and the previous amendment are extremely interesting. However, I should like to probe the Minister a little on whether the pension entitlement that is being given up will be amalgamated back into the general fund. Although we all know that NICs—in those days, pension credits applied—are not held in a bank account waiting for the contributor to retire, these pensioners paid money to the Government in the expectation that they would be recompensed. What sums are we talking about? What is the average pot that is being given up? How many pensioners—the so-called Kindertransportees—are involved in this exercise?

Lord McKenzie of Luton: Originally there were about 10,000 Kindertransportees. We are aware of 150 individuals who might benefit from this. Nothing is being given up in terms of returning contributions to individuals. We propose to wipe these people's insurance records—if that is what they want; it will not necessarily be beneficial for all—so that they do not have to be recognised when computing German pension provision. This is a cost on the German pension scheme. Nothing will happen at the UK end other than there being a record of people being credited into a system. If they wish, that will simply be expunged, but no refunds will be awarded in that regard.
	In a minority of cases it is possible that removing the pre-1948 insurance record could reduce a Kindertransportee's entitlement to UK state pension. That is not the intended effect of these provisions, so we propose that the Secretary of State should have discretion to maintain an individual's UK contributory benefits at their existing level should he wish to. They will not lose out on current UK entitlement. We simply wipe the record and create the opportunity for an increased German provision. I hope that that helps.

On Question, amendment agreed to.

Lord McKenzie of Luton: moved Amendment No. 136AB:
	After Clause 114, insert the following new Clause—
	"Pre-1948 insurance: supplementary
	(1) In section (Pre-1948 insurance affecting German pension entitlement) a "period of pre-1948 insurance" means any period ending before 6th April 1948 to which subsection (2) applies by reference to any person ("the insured person").
	(2) This subsection applies to a period which is one of the following—
	(a) a period for which the insured person at any time was, was deemed to be, or was treated as, insured under the Widows', Orphans' and Old Age Contributory Pensions Acts 1936 to 1941, or under any provision of Northern Ireland legislation corresponding to those Acts;(b) a period for or in respect of which contributions of any class were credited to the insured person in accordance with the provisions of the National Insurance Act 1965 (c. 51) or regulations made under that Act, or in accordance with any provision of Northern Ireland legislation corresponding to that Act or such regulations;(c) a period for which contributions are credited to the insured person by any provision of the Social Security (Widow's Benefit, Retirement Pensions and Other Benefits) (Transitional) Regulations 1979 (S.I. 1979/643), or by any provision of Northern Ireland legislation corresponding to a provision of those regulations."
	On Question, amendment agreed to.

Lord Fowler: moved Amendment No. 136AC:
	Before Clause 115, insert the following new Clause—
	"Review of operation of Act
	(1) The Secretary of State must, before the end of 2014, prepare a report on the operation of the provisions of this Act.
	(2) The Secretary of State may prepare subsequent reports on the operation of the provisions of this Act.
	(3) The Secretary of State must lay a copy of any report prepared under this section before Parliament."

Lord Fowler: Amendment No. 136AC is an exploratory amendment to find out the Government's attitude. Precedent would suggest that they will accept the spirit of what is set out here, if not the detail. It is a familiar point. We debated it during our consideration of the last Pensions Bill. On that occasion, the amendment was accepted by the Government, for which I am grateful.
	The point is that post-legislative scrutiny is just as important as pre-legislative scrutiny. You could make an argument, particularly in relation to pensions legislation, that post-legislative scrutiny is rather more important, because all the mistakes appear to take place afterwards in the administration of the scheme. Things are missed out. Mistakes rarely occur because the legislation was set out badly. In my experience, they have often been the result of administrative error. Errors of this kind take place and no one should be totally surprised about them. The only trouble is that, if errors take place in pensions, the costs are substantial.
	That is basically the case. I will not set it out again, because the Minister has heard all my arguments previously. He has only to look them up and read them from 12 months ago and he will see the case all set out. I am basically asking for some kind of checking mechanism that the purposes of the Bill amount to the reality in the later Act and how it goes into effect.
	As I am sure the Minister has discovered, the words in this amendment are taken exactly from the words of the last Pensions Act. The Minister was enthusiastic at the time in accepting that clause and those exact words. One would think, therefore, that the argument is fairly strong. This pensions legislation is a twin measure of two Bills: one Act already, another Act to come. It would be odd to have a post-legislative scrutiny clause in one part of it but not in the other. As the Minister so obligingly agreed last time to the detail of and exact way in which this amendment is formulated, for once the case that I am putting is totally unanswerable. I beg to move.

Lord Skelmersdale: The Minister will remember that, when I supported my noble friend Lord Hunt's amendment on the abolition of compulsory annuities, I spoke about campaigns in your Lordships' House. I am happy to support my noble friend Lord Fowler's campaign for post-legislative scrutiny, which he introduced to your Lordships' House in his maiden speech in 2001. In last year's Pensions Bill, after what I would regard as a tiny bit of argy-bargy with another place, my noble friend managed to get the Government to accept post-legislative scrutiny of that legislation in 2014. The provision is in Section 24 of that Act. Amendment No. 136AC would produce the same result for this Bill.
	I found it rather ironic that, today of all days, my noble friend Lord Fowler spoke about the expense of errors in social security and, especially, pensions law—an underestimate if ever I heard one. We have knowledge today of the ombudsman's report on Equitable Life, which we on these Benches welcome. My party's pressure forced the Government to allow the ombudsman to investigate the regulation of Equitable Life in the first place. The ombudsman highlights significant regulatory failings, including those that occurred when the present Prime Minister, as Chancellor of the Exchequer, was responsible. He cannot escape the blame.
	The Government must now issue an apology and create a repayment scheme for those who lost out. The scheme must be consistent with sound public finances. That means that policyholders cannot expect to receive payments for the full losses suffered. None the less, if the Government do not come up rapidly with a plan, we most certainly will. We also remember the related environment for, and the cost of—we now know those costs—setting up the financial assistance scheme.
	I have a little trouble, as the Minister no doubt does, with the date that my noble friend has chosen. The Government intend to consider changes to personal accounts—a good example is transfers in and out—in 2017. In order to achieve this, they will need to undertake at least a partial review the year before—that is, 2016—and consult on that review. Given that the Government have now conceded that pensions Acts need periodic review, I cannot imagine that the Minister will defy my noble friend Lord Fowler—at least, I jolly well hope not—in his endeavour on this Bill. Otherwise, I would add power to my noble friend's elbow to pursue his course, if necessary in the same way as was done last year. So, not today.

Lord McKenzie of Luton: I start by thanking the noble Lord, Lord Fowler, for his amendment. He is absolutely right: we had some discussion of this issue during the passage of the previous Pensions Bill. I do not have a totally shared recollection of the enthusiasm with which we accepted it; my arm is still hurting. I shall come back to changes since then.
	Before doing so, I turn to Equitable Life, which the noble Lord, Lord Skelmersdale, touched on. The Parliamentary Ombudsman has invited the Government to consider issues raised in her report and to reflect on what their response should be. The Government recognise that the ombudsman's report raises issues that are of concern to all interested parties. The length and complexity of the report mean that the Government will need to consider it carefully before giving their response to the House of Commons in the autumn.
	Last year, we were awaiting the Government's response to the Law Commission's report on post-legislative scrutiny. In March this year, my right honourable friend the Leader of the House of Commons published a Command Paper setting out our response to this report and establishing a systematic approach for the post-legislative scrutiny of Bills that achieved Royal Assent from 2005 onwards.
	This has, for the first time, put a system in place that will ensure that post-legislative scrutiny is the norm. Departments will have to publish a memorandum—it should be submitted in the first instance to the relevant committee in the other place but will be available to Parliament as a whole—on the provisions of an Act within three to five years of Royal Assent. This memorandum will allow Parliament to make an informed decision on whether full scrutiny is necessary.
	We have begun informal discussions with the Clerk of the Work and Pensions Select Committee about the submission of memoranda for the Pensions Act 2007 and for this Bill. Due to the variety of measures in this Bill, it is highly likely that we will need to publish more than one memorandum. For example, the noble Lord's amendment to the Pensions Act 2007 resulted in a requirement for the Secretary of State to report on the operation of provisions of that Act in 2014. It may be prudent to cover some provisions in the Bill that relate to the 2007 Act, such as simplification of a second state pension, in the same report. However, we may identify measures in the Bill that can be reviewed before 2014. We have already agreed with the Select Committee that the position on contribution limits and transfers in and out of personal accounts will be reviewed in 2017. We will have further discussions, but it may not be sensible to submit a memorandum on the operation of the employer duty provisions before then, not least because the phased implementation of these duties will continue until 2015.
	We are in a very different position from when we considered the noble Lord's similar amendment to the Bill of last Session. The Government are now committed to a systematic approach to post-legislative scrutiny that is thorough and proportionate. Alongside existing plans to monitor and evaluate progress, we will ensure that Parliament has adequate opportunities to review all the provisions of the Bill. I hope that this satisfies the noble Lord.

Lord Fowler: The Minister has given an interesting reply. I am extremely glad that, at long last, we have accepted the principle that post-legislative scrutiny should become part of the normal legislative process. There is no question but that, with any legislation, many expensive mistakes are made under all Governments after a Bill has been enacted, not because it has been badly drafted but because it has been badly administered or managed. I am grateful that the Government have accepted the principle of post-legislative scrutiny. I will study carefully what the Minister has said and take other soundings, to check that this process, which seems to be all apple pie and goodness, is just that. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 115 [Orders and regulations]:

Lord McKenzie of Luton: moved Amendments Nos. 136B to 138:
	Clause 115, page 53, line 41, after "power" insert "conferred on the Secretary of State"
	Clause 115, page 54, line 1, leave out "an order or regulations under this Act" and insert "such an order or regulations"
	Clause 115, page 54, line 4, leave out "to which subsection (4) or (5)" and insert "or regulations to which subsection (4)"
	Clause 115, page 54, line 6, leave out from first "order" to "has" and insert "or regulations to which this subsection applies may be made unless a draft of the order or regulations"
	On Question, amendments agreed to.

Lord Tunnicliffe: moved Amendment No. 138A:
	Clause 115, page 54, line 8, leave out subsection (5) and insert—
	"( ) Subsection (4) applies to—
	(a) regulations under section 15(2)(c), 16(1)(c), 85, (Persons working on vessels), (Power to amend provisions of Pensions Act 2004 relating to contribution notices etc.) or (Disclosure of information relating to state pension credit recipients);(b) the first regulations under section 3(2) or (5B), 5(2) or (5B), 6(4)(b) or (5B) or 8(3)(b);(c) an order under section 58 or 61(5); (d) an order under section 117 amending or repealing any provision of an Act;(e) an order under paragraph 9(7) of Schedule 4."

Lord Tunnicliffe: Clause 115 provides that any power under the Bill to make an order or regulation is exercisable by statutory instrument. It also sets out the parliamentary procedure that will apply to such secondary legislation. We are approaching the end of the Bill and this important amendment ensures that regulation-making powers in some sections that we have debated are subject to the appropriate level of parliamentary scrutiny. For example, this amendment requires regulations relating to the sharing of pension credit customer data with energy companies to be subject to the affirmative procedure, thereby giving both Houses an adequate opportunity to scrutinise these measures. In this clause, we have also complied with a number of helpful recommendations made by the Delegated Powers and Regulatory Reform Committee. In short, this important amendment ensures that secondary legislation under the Bill will be subject to appropriate parliamentary oversight. I beg to move.

Lord Skelmersdale: Credit where credit is due—"for once", the noble Lord might think. As with a previous amendment, I congratulate the Government on accepting the recommendations of one of your Lordships' most powerful Committees.

On Question, amendment agreed to.
	[Amendment No. 139 had been withdrawn from the Marshalled List.]
	Clause 115, as amended, agreed to.
	Clause 116 [Orders and regulations: supplementary]:

Lord McKenzie of Luton: moved Amendments Nos. 139ZA and 139ZB:
	Clause 116, page 54, leave out line 12 and insert—
	"( ) This section applies to an order or regulations made by the Secretary of State under this Act.
	( ) An order or regulations may include—"
	Clause 116, page 54, line 21, leave out "under this Act"
	On Question, amendments agreed to.
	Clause 116, as amended, agreed to.
	Clause 117 [Power to make further provision]:

Lord McKenzie of Luton: moved Amendment No. 139ZC:
	Clause 117, page 54, line 42, after "Part 1" insert "or section (Contracting-out: abolition of all protected rights)"
	On Question, amendment agreed to.
	Clause 117, as amended, agreed to.

Lord Tunnicliffe: moved Amendment No. 139ZD:
	After Clause 117, insert the following new Clause—
	"Pre-consolidation amendments
	(1) The Secretary of State may by order make such modifications of enactments within subsection (2) as in the Secretary of State's opinion facilitate, or are otherwise desirable in connection with, the consolidation of any of those enactments.
	(2) The enactments are—
	(a) the Pension Schemes Act 1993 (c. 48);(b) the Pensions Act 1995 (c. 26); (c) Parts 1 to 4 of the Welfare Reform and Pensions Act 1999 (c. 30);(d) Chapter 2 of Part 2 of the Child Support, Pensions and Social Security Act 2000 (c. 19);(e) the Pensions Act 2004 (c. 35);(f) the Pensions Act 2007 (c. 22);(g) this Act;(h) enactments referring to any enactment within paragraphs (a) to (g).
	(3) No order may be made under this section unless a Bill for consolidating the enactments modified by the order (with or without other enactments) has been presented to either House of Parliament.
	(4) An order under this section, so far as it modifies any enactment, is not to come into force except in accordance with provision made for the purpose by the Act resulting from that Bill.
	(5) An order under this section must not make any provision which would, if it were included in an Act of the Scottish Parliament, be within the legislative competence of that Parliament."

Lord Tunnicliffe: I shall speak also to Amendments Nos. 140B and 142D. The amendment will help to facilitate the consolidation of private pensions legislation. Work is in progress, in conjunction with the Law Commission, to consolidate that legislation, which is currently contained in six different Acts. Presuming Royal Assent to this Bill, that number will rise to seven. As noble Lords will no doubt be aware, strict rules on consolidation mean that no changes can be made, even to correct clear unintended errors, to omit spent or unnecessary provisions, or to remove anomalies or ambiguities. The existing law must be reproduced "warts and all".
	Such issues can, however, be addressed by way of a pre-consolidation order, provided that no change is made to the policy enacted by the legislation. Section 321 of the Pensions Act 2004 provides the power to make a pre-consolidation order. However, as currently drafted, the power extends only to legislation that was in force at the time that the 2004 Act was passed. That means that an order made under the power in Section 321 cannot include any amendments that may be needed in respect of subsequent legislation, specifically the Pensions Act 2007 or the Bill, when enacted.
	The amendment will ensure that any changes needed in respect of the more recent primary legislation can be addressed though a pre-consolidation order in the same way as for the earlier pensions legislation. I beg to move.

On Question, amendment agreed to.
	Clauses 118 and 119 agreed to.
	Schedule 9 [Repeals]:

Lord McKenzie of Luton: moved Amendments Nos. 139ZE to 139E:
	Schedule 9, page 97, line 15, after "6(1)" insert ", (2) and (4)."
	Schedule 9, page 97, line 20, leave out "80(1)(a)(iii)," and insert "80(1)(a) at the end of sub-paragraph (iii), the word"
	Schedule 9, page 97, line 21, at end insert—
	
		
			  "Section 23(2) to (4)." 
		
	
	Schedule 9, page 97, line 21, column 2, at end insert—
	
		
			  "In Schedule 6, in paragraph 7(3)(a), the words "employees who are"." 
		
	
	Schedule 9, page 97, line 24, at end insert—
	
		
			 "Social Security Contributions and Benefits Act 1992 (c. 4) In Schedule 4B, in paragraph 12, the definition of "assumed surplus"." 
		
	
	Schedule 9, page 98, line 19, at end insert—
	"Part 2AContracting-out: abolition of all protected rights
	
		
			 Title Extent of repeal 
			 Pension Schemes Act 1993 (c. 48) Section 10. 
			  Sections 25A to 27A. 
			  Section 30. 
			  Sections 32 and 32A. 
			  Section 33A. 
			 Pensions Act 2007 (c. 22) In Schedule 4, paragraphs 5, 8 to 10 and 12 to 14. 
		
	
	These repeals have effect in accordance with section (Contracting-out: abolition of all protected rights)."
	On Question, amendments agreed to.
	[Amendment No. 140 not moved.]

Lord McKenzie of Luton: moved Amendments Nos. 140A to 141:
	Schedule 9, page 99, line 13, at end insert—
	
		
			 "Pensions Act 2004 (c. 35) In section 173(5), the words "of this Act"." 
		
	
	Schedule 9, page 99, line 20, at end insert—
	
		
			 "Pensions Act 2004 (c. 35) Section 321." 
		
	
	Schedule 9, page 99, line 20, at end insert—
	
		
			 "Pensions Act 2004 (c. 35) In Schedule 1, paragraph 28." 
		
	
	On Question, amendments agreed to.
	Schedule 9, as amended, agreed to.
	Clause 120 [Commencement]:

Lord McKenzie of Luton: moved Amendments Nos. 141A to 141D:
	Clause 120, page 55, line 18, at end insert—
	"( ) section 106(1), (3) and (5) to (8);"
	Clause 120, page 55, line 18, at end insert—
	"( ) section (Restriction on purchase of annuities);"
	Clause 120, page 55, line 18, at end insert—
	"(ca) section (Power to amend provisions of Pensions Act 2004 relating to contribution notices etc.);"
	Clause 120, page 55, line 19, at end insert—
	"( ) section (Delegation of powers by the Regulator);"
	On Question, amendments agreed to.

Lord McKenzie of Luton: moved Amendment No. 141DA:
	Clause 120, page 55, line 19, at end insert—
	"( ) section 111;"

Lord McKenzie of Luton: The technical amendments in this group will, on Royal Assent, bring into force powers to make secondary legislation and it will be unnecessary to make a commencement order just to bring those powers into force. This has no effect on the coming into force of the substantive provisions of the Bill. The new employer duties, for example, will still come into force in the way that we have previously considered. It will mean, however, that the technical complexity of orders under the Bill can be reduced. That must be a good thing, not least for better regulation. More important is that we will also be able to give proper notice of the detailed requirements that will apply under the Bill before they take formal effect.
	As this is the last time that I will be at the Dispatch Box in these Committee proceedings, I take this opportunity to thank all noble Lords who have participated in our extensive deliberations on the Bill. I greatly look forward to Report stage. I beg to move.

Lord Skelmersdale: I am glad that the Minister added that last tiny paragraph. I, too, express my gratitude and that of my noble friend Lady Noakes—who was here very briefly, but has now vanished again—to both Ministers for their tolerance over eight days. Of course, we have not really had eight days; I estimate that we have probably had about six and a quarter days, but I have not done the sums. I extend my thanks to all Members of your Lordships' House who must have felt at various moments that when they came into the Chamber they were watching paint drying. I assure them that our discussions on this Bill have been very serious and have had profound effects, as will the remaining stages.

Lord Kirkwood of Kirkhope: Perhaps I may also say, on behalf of my colleagues, how grateful we are to the Minister. He has endless patience and is always willing to assist—where he can. That is an important subclause to that sentence. I am lost in admiration at the way that he deals with voluminous briefs; in another life, he will have a career as a speedreading tutor. Finally, the accessibility and professionalism of the Bill team is much appreciated by all and that has made the past eight days a positive pleasure, as far as these things can ever be a pleasure. I thank the Minister and his team.

On Question, amendment agreed to.

Lord McKenzie of Luton: moved Amendments Nos. 141E to 141H:
	Clause 120, page 55, line 19, at end insert—
	"( ) section (Disclosure of information relating to state pension credit recipients);"
	Clause 120, page 55, line 19, at end insert—
	"( ) section (Pre-1948 insurance affecting German pension entitlement);"
	Clause 120, page 55, line 19, at end insert—
	"( ) section (Pre-1948 insurance: supplementary);"
	Clause 120, page 55, line 20, at end insert—
	"( ) any other provision of this Act so far as it confers any power to make regulations, rules, an Order in Council or an order under this Act."
	On Question, amendments agreed to.
	Clause 120, as amended, agreed to.
	Clause 121 [Extent]:

Lord McKenzie of Luton: moved Amendments Nos. 142 to 143:
	Clause 121, page 55, line 30, at end insert "and section 86 so far as it relates to those Chapters"
	Clause 121, page 55, line 30, at end insert—
	(a) section (Persons working on vessels)(2) to (7);"
	Clause 121, page 55, line 30, at end insert—
	"( ) section (Persons in offshore employment);"
	Clause 121, page 55, line 30, at end insert—
	"( ) section (Restriction on purchase of annuities)(2);"
	Clause 121, page 55, line 30, at end insert—
	"( ) section (Pre-1948 insurance affecting German pension entitlement);"
	Clause 121, page 55, line 30, at end insert—
	"( ) section (Pre-1948 insurance: supplementary);"
	Clause 121, page 55, line 31, leave out "117" and insert "(Pre-consolidation amendments)"
	Clause 121, page 55, line 34, at end insert "(subject to the provision made by section 46(3), section 47(2) and paragraph 9 of Schedule 8)"
	On Question, amendments agreed to.
	Clause 121, as amended, agreed to.
	Clause 122 agreed to.
	House resumed: Bill reported with amendments.

Education and Skills Bill

Lord Adonis: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved accordingly, and, on Question, Motion agreed to.
	House in Committee accordingly.
	[The CHAIRMAN OF COMMITTEES in the Chair.]
	Clause 39 [Failure to fulfil duty under section 2: initial steps]:

Baroness Morris of Bolton: moved Amendment No. 124:
	Clause 39, page 22, line 2, at end insert—
	"( ) In this section, "reasonable excuse" includes circumstances in which a young person—
	(a) is homeless;(b) has health problems, including temporary illness, long term disability or ongoing mental health issues;(c) has addiction problems;(d) has secured a place on a course which does not start until the following month or the following term;(e) is recovering from giving birth;(f) has caring responsibilities;(g) has particular learning difficulties for which support has been put in place."

Baroness Morris of Bolton: I shall also speak to Amendments Nos. 125 to 127. The amendments deal with attendance notices and the much-heralded Clause 39, which states that attendance notices may be issued to those who fail to participate in their Section 2 duty without having a reasonable excuse. Amendment No. 124 is a simple attempt to state in the Bill what might constitute a reasonable excuse. This duty, no matter how well intentioned, must not fall unreasonably on those young people who simply do not have the means or ability to fulfil it. The list of circumstances in the amendment is not exhaustive, but it includes a number of situations that could make full participation difficult, such as if a person is homeless, has health or addiction problems, caring responsibilities or learning difficulties. Those are circumstances in which it could be argued that the state is failing young people. It is a double blow then to place them on notice for their failure to participate in education. These are circumstances in which the local authority's obligations should be considered greater than the young person's.
	The Minister may say that all these circumstances would fall within the meaning of "reasonable excuse". If that is so, there should be no problem in accepting the amendment. Placing an indicative list in the Bill can only assist in explaining the position to the parties involved.
	Amendments Nos. 125 to 127 are designed to emphasise that enforcement is purely a last resort. Clause 40 currently does not require local authorities to have taken all reasonable steps to secure voluntary participation in education and training before an attendance notice is issued. Our amendment would clarify the position and ensure that young people are helped through the most appropriate education and training before any formal sanctions are used. There should be a well understood and transparent process that lays down the action that the local authority can take. However, there should also an absolute requirement to avoid a formal enforcement process until such time as all other options have been exhausted. This is a safeguard measure to ensure that local authorities are diligent in upholding their obligations.
	The Liberal Democrats also have an amendment in this group that would explicitly make enforcement a last resort, and sensible amendments to limit any potential fines. We must never forget that the young people who find themselves in this sort of circumstance will not have money to spend on fines.
	I had a most interesting meeting with the Reverend Paul Nicholson of the Zacchaeus 2000 Trust, which helps young people who face fines. He made it clear that punitive fines can be disastrous—a tipping point where desperate young men turn to theft and young women to prostitution. Those are extreme cases, but the noble Baronesses, Lady Sharp and Lady Garden, are absolutely right to draw attention to this potentially destructive issue. I beg to move.

Baroness Sharp of Guildford: I shall speak specifically to Amendments Nos. 146, 150A and 153. Amendment No. 150A is a new version of what used to be Amendment No. 142, which has been withdrawn, and which we slightly resisted.
	We support the noble Baroness, Lady Morris, in seeking a more explicit definition of "reasonable excuse", and also in the notion that the court should be very much the last resort. "Reasonable excuse" is covered at some length in a letter dated 13 February from the Minister, Jim Knight, to my noble friend Mr Laws in the other place. The letter clearly sets out the circumstances that will constitute a reasonable excuse, such as having health problems, being a young carer, giving birth and so forth, as mentioned by the noble Baroness, Lady Morris, and stated in the amendment. It also makes it clear that guidance will be issued to local authorities on how to interpret that concept. I do not know when the Government are likely to issue the guidance or whether we shall have sight of it before we come to the next stages of the Bill after the Recess.
	All of these amendments relate to the possible penalties that might be imposed on young people as a result of their failing to respond to any of the encouragements or sanctions from the local authority that is trying to get them to participate in education and training. They were proposed to us by the Zacchaeus trust, which works extensively with young people and knows very well how little money most of them have. It agues that a failure to recognise the depth of poverty experienced by the 10 per cent of young people who need help most will undermine all the good intentions of this legislation.
	Unemployment pay for a 16 to 18 year-old is £47.95 a week. Most do not get that. They are eligible only if they are in severe hardship. But if they are in this category—if they have broken up with their parents and are homeless—£47 a week is still a totally inadequate amount to live on. If they participate in education and training, they are eligible for the education maintenance allowance of £30 a week, but only if their parents apply. Many parents do not apply, partly because they are often poor and illiterate and find it impossible to understand the forms they would have to complete.
	Clause 43 includes appeal arrangements, but on these occasions most of these young people and their parents need help in formulating such appeals. If they do not participate, under the proposals they could be hit in a youth court with a class 1 fine, the maximum of which is £200. Amendment No. 150A suggests that such sanction should be used only as the last resort and asks the Secretary of State to define the circumstances constituting a last resort. Amendment No. 146 suggests that any fine must not take the form of deductions from unemployment. If a young person is receiving only £47.95 a week, he cannot afford to lose any of it. Amendment No. 153 suggests that the issue should always be dealt with in a youth court. I seem to recall that we have already had assurances from the Minister that all of these young people will be dealt with in a youth court, even if they are over 18 when they are brought to court. If the issue has arisen as a result of behaviour before they were 18, it should nevertheless be dealt with by a youth court. I look forward to hearing what the Minister has to say in response to these amendments.

Lord Dearing: I support the spirit of these amendments. I should also like to raise one further thought—the possibility of offering the young person the opportunity to do community service as an alternative to a financial penalty.

Lord Adonis: Before I address the amendments, I want to return briefly to the issues about the age of the young person and the enforcement system that we discussed at the end of our previous sitting in Committee. These issues were raised in the final remarks of the noble Baroness, Lady Sharp. Important points were raised which have prompted me to look into the issue in more detail. It might be helpful if I clarified that my department is working with the Ministry of Justice to develop proposals, possibly involving use of the County Courts, so that a young person could not in any circumstances, whatever their age, be imprisoned as a result of defaulting on a fine for not complying with an attendance notice without a reasonable excuse. The details of how to achieve this greater certainty are being worked on and I shall bring forward amendments on Report if necessary. I reiterate that fines are, in any case, the ultimate sanction for non-participation in education and training. They would arise in only a small number of cases where all other avenues, including the option suggested by the noble Lord, Lord Dearing, had been exhausted. These further options are set out in Clauses 39 to 48, which we are continuing to debate today.
	Amendment No. 146, in the name of the noble Baroness, Lady Sharp, relates to fine enforcement methods and the attachment of benefits. It is very rare for young people below the age of 18 to be able to claim jobseeker's allowance. In the unlikely event that a young person is claiming jobseeker's allowance and they are found guilty of the offence under Clause 45, they will be liable to a maximum level 1 fine on the standard scale, which is the lowest category available. The maximum level 1 fine is currently £200, but the actual amount in each case is decided and fixed by the courts in the light of individual circumstances. A youth court would take a person's earnings into account when deciding the level of the penalty and set it at a rate which it believes the young person can pay. Once a fine is determined, it is up to the court to decide how to enforce it. It would not be appropriate to constrain its flexibility in this area. However, I can reassure the Committee that a deduction from benefits order cannot be taken out against a young person who is below the age of 18.
	I turn now to the amendments on what must happen before sanctions can be considered. Amendment No. 124, in the name of the noble Baroness, Lady Morris, would specify in primary legislation what would count as a reasonable excuse. The now much-quoted letter of 13 February from Jim Knight to David Laws outlines in more detail the thinking behind the concept of a reasonable excuse for not participating. I note that the examples given in the letter of what might constitute a reasonable excuse are precisely those which now appear in the noble Baroness's amendments. However, it was made very clear in the letter that those examples should not be taken to be an exhaustive list. Their purpose was to illustrate the range of ways in which a young person's circumstances could prevent them participating.
	It was also made clear that listing those examples was not meant to suggest that all young people in these situations would always be unable to participate. I refer specifically to the position of teenage mothers, which is a particular concern of the noble Baronesses. Teenage mothers will be entitled to reasonable time off around their pregnancy, as are young people who are in compulsory schooling. There will be a range of ways in which they can re-engage in learning when they are ready and they will receive support to do so. In particular, the Government have committed to building a Sure Start children's centre in every community where teenage parents can access in one place a broad range of support, including childcare, education and training, parenting support and health-related information, advice and treatments.
	In a number of these centres, training in parenting skills, provision to address the mother's other educational needs and childcare are all integrated, enabling the young person to combine learning and caring for their child. For example, Newcastle-under-Lyme college in Staffordshire runs a learning programme for teenage parents at a local children's centre where childcare is also provided. As well as working on literacy, numeracy and IT skills, the programme helps participants access other support services for themselves and their children, such as health visitor services. Most participants later progress on to further learning at the college's main site.
	Similarly, the Pinnacle project in Kent is an area-wide initiative to bring young parents back into education and training. Groups are located in children's centres, offering multi-agency services as well as childcare, and providing an informal route into education and training through fun and interactive short courses aiming to build confidence and self-esteem along with practical skills. The gradual addition of accredited structured courses leads to the eventual inclusion of formal programmes, including literacy and numeracy work.
	I give these examples to emphasise the importance of putting the appropriate provision in place. If appropriate provision of the kind I have described is put in place, it could be in the best interests of young mothers to engage in education and training alongside their caring responsibilities, and the work of children's centres could facilitate this in highly positive ways. Teenage mothers often do not achieve the qualifications they need to progress into further education. About 40 per cent of teenage mothers at the moment leave school with no qualifications at all, and those who achieve better long-term outcomes for themselves and their children are, of course, those who gain employment and acquire qualifications at school. Therefore, we believe it is right to encourage, as appropriate, the participation of teenage mothers in education and training.
	We will issue detailed guidance to local authorities on how to interpret their responsibilities and how to exercise appropriately their duties in relation to support and powers regarding enforcement action. I cannot say precisely when that guidance will be available. If I am in a position to say more before Report I will certainly do so, but we would not wish to specify the arrangements inflexibly in primary legislation.
	Amendment No. 125, in the name of the noble Baroness, Lady Morris, requires reasonable steps to be taken by local authorities before they embark on sanctions. It is in effect a requirement under the Bill that local authorities should act reasonably. As the Public Bill Committee of another place heard from John Freeman from the Association of Directors of Social Services, we see enforcement as the last option and an indication that we have failed somewhere. A disengaged young person is an indication not just that they have failed but also that we have failed. Reasonable steps are set out under the Bill. Clause 40 makes it clear that a local authority cannot issue an attendance notice until it has taken the initial steps in the enforcement process provided for in Clause 39; namely, giving 15 days' notice in writing of its intention to issue the attendance notice. Under Clause 39 a local authority cannot take those initial steps in the enforcement process until it has ensured that the person has been offered suitable provision and the right support.
	On Amendments Nos. 126 and 127, also in the name of the noble Baroness, Lady Morris, we have made it clear that there can be no enforcement where a young person has unaddressed needs or until an appropriate learning opportunity and suitable support have been provided. Clause 39(5) makes it explicit that before a local authority can even give notice of its intention to issue an attendance notice, it must have already ensured that all reasonable steps have been taken to ensure that relevant support has been offered to the young person and that the young person has had the opportunity to take advantage of it. As the local authority cannot issue an attendance notice until it has given notice of its intention to do so, and the authority cannot give that notice until the right support has been provided, it follows that an attendance notice cannot be issued until the right support has been provided.
	I can be similarly positive about Amendment No. 150A, in the name of the noble Baroness, Lady Sharp, which seeks to insert "last resort" into the sanctions regime. As I have said repeatedly, the use of any sanctions would indeed be a last resort and should be a stage that is rarely reached. The point of including enforcement provisions in the Bill is to make it clear that the requirement to engage in education and training is real and serious, and for it to have the effect we want in terms of changing public expectations. The Bill already ensures, however, that enforcement action would in reality be a last resort.
	Clause 39 states that the local authority cannot take enforcement action unless it has provided the right support for the young person and enabled him to take advantage of that support. It already states that the authority cannot take action unless the young person is failing to participate without a reasonable excuse. The need for there to be a reasonable excuse is reiterated at every subsequent stage of the process.
	In addition, before taking even the first step in the process, the authority must give the young person the opportunity to make representations. The next step is in essence a final written warning to ensure that the young person can be in no doubt about what is required of them and is given a clear last chance to engage voluntarily. The independent attendance panel provides a route of appeal for young people and an extra safeguard to check that the local authority's decisions about enforcement are appropriate. In effect, therefore, all those provisions together mean that action can be taken only as the last resort.
	Finally, Amendment No. 153, which was moved by the noble Baroness, Lady Sharp, seeks to link penalties to the level of educational maintenance allowance. We will consider the amount of the fixed penalty notice closer to implementation to ensure that it is appropriate. As part of this consideration, we will look carefully at the circumstances that many young people are in, including their income, to fix the appropriate level of financial penalty. This will include consideration of the level of financial support provided to young people. However, it does not make sense to link the penalty directly to the current EMA payment levels, as we do not yet know how the future system of financial support will work and it would be inappropriate to link the penalties to it in the way that the amendment suggests. As I say, however, the level that we set will take full account of the level of financial support provided to those under 18 when this comes into force.

Baroness Sharp of Guildford: I am very grateful to the Minister for his clarification and assurances. It is useful to have these on the record, and I thank him very much for that.

Baroness Morris of Bolton: I, too, am most grateful to the Minister for his explanation. May I check something? I hope that I heard what I heard, but I might simply have heard what I wanted to hear. Did he say that the Government are seriously considering looking at how all this can be dealt with through civil penalties, so that there will be no question of a young person getting a criminal record?

Lord Adonis: I think that the noble Baroness heard too much. I was careful to say at the end that this follows directly from the further work that we have done on the specific issue of those over 18 who have unpaid fines. This eventuality was discussed in previous debates. The further work that we have done on this has led us to conclude that we may need to table amendments to make it categorically clear that in no circumstances whatever could a young person going through the fine enforcement system, which is the last stage of the last stage, be subject to imprisonment. That is probably one part of what the noble Baroness wanted to hear, because linking the regime to the civil courts has been one of her concerns. However, she did not hear absolutely everything that she wanted to hear, I am afraid.

Baroness Morris of Bolton: I thank the Minister for that clarification. That means that I can continue to speak to lawyers to see how we might be able to find a way to make this a civil penalty. The noble Lord, Lord Dearing, talked about community service. If we could do that rather than impose a criminal penalty, we could all live much more happily with the compulsion element, although I know that at the moment a community sentence would be a criminal sentence. We are simply trying to find our way around this.

Baroness Sharp of Guildford: At the moment, this is a matter for the youth courts, which I assume frequently mete out community penalties. Should young people be fined, the maximum fine is, as I think the Minister said, £200. Obviously when imposing any fine, the court would take into account the means of the young person concerned.

Lord Adonis: That is absolutely the case. They would take those means into account in the way that the noble Baroness described.

Baroness Morris of Bolton: In response to the Minister's response to Amendment No. 124, I now know where my honourable friend Nick Gibb in another place got the various people who he thinks should have a reasonable excuse. He clearly got them from the letter sent to David Laws.
	I fully accept that we should have just as much, if not more, ambition for our young people who face the greatest disadvantage, but I remain convinced that we should do all that we can to coerce before we compel. I would feel more comfortable knowing that a definition of a reasonable excuse was somewhere in the Bill, so that these broad categories were universal and it was not perhaps just a postcode lottery. I accept that there will be guidance, but as the noble Baroness, Lady Sharp, said, we may not see that guidance before this Bill is passed, although the Minister said that he may be able to do something by Report stage. I do hope so, or we will be asked to take on trust exactly what will be in the guidance.
	I am particularly grateful to the Minister for everything that he said about young mothers. This is of great concern. Could something be done so that their caring responsibilities and bonding with their babies can take place alongside some form of training and parenting skills? We would be very pleased with that. I want to say something about having 15 days' notice; this concerns me somewhat. Many of the young people we are talking about may not be living with their parents. They often live with friends, moving around from place to place; it is called sofa surfing. Quite where the letter will go and how they will be able to comply within 15 days causes us some concern. Could the Minister consider how that might be addressed between now and Report stage? I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 39 agreed to.
	Clause 40 [Attendance notice]:
	[Amendments Nos. 125 to 127 not moved.]
	Clause 41 [Attendance notice: description of education or training]:

Baroness Perry of Southwark: moved Amendment No. 128:
	Clause 41, page 23, line 13, at end insert ", or
	( ) in the case of a young person who is incapable of following a course leading to a qualification for reasons of mental health or mental capacity, in the course of employment, either full or part-time, with full job support."

Baroness Perry of Southwark: I rise to move Amendment No. 128 and to give my support to some of the amendments that my noble friend will speak to as part of this group. The intention behind Amendment No. 128 is not, as we have sometimes previously debated, to exclude any category of young person from the provisions of the Bill, but rather to extend the description of accredited education and training to one small and important group of young people. Once or twice in Committee we heard reference to the Rose project. Some of us were privileged to meet the young people who were being helped by the project, thanks to the efforts of my noble friend Lady Verma. We met three quite amazing young people and their dedicated guides and mentors from Havering College of Further and Higher Education.
	The Rose project has taken young people who were, because of their mental capacity, absolutely incapable of learning to read and write. These were people at the very lowest range of mental competence. One young woman, moving in her vivacity and enjoyment of life, was described by her father as having been completely withdrawn before she became involved in the project, her head permanently hanging down, incapable of more than minimal speech and totally uninterested in life. What had made that difference? The project had given her well-structured support in a job. Starting with only four hours a week, and with someone permanently at her side in the early stages, she had gradually moved up so that the next thing she wanted—she told us with a great giggle—was to work full-time in Sainsbury's. I pay full tribute to Sainsbury's because it has taken on several of these young people. The manager of the store in which Alexandra worked told us that no allowance was made for her and that she was doing a proper job. However, what was crucial was the structured job support she was being given by the lecturers from the college of education.
	Alexandra and the two young men we met from the project are never going to follow an accredited course in the formal sense or pass an exam, but their lives have been turned around by this project. Surely we should be able to incorporate such projects into the description of what is acceptable and would meet the requirements of the Bill. We should not exclude these young people and refuse to include them as part of the 16 to 18 group who are to have provision made for them; rather we should say that the kind of structured job support they are receiving could be included. Such young people would themselves feel included, and crucially funding would become available to allow wonderful schemes such as the Rose project to be rolled out more widely in further education colleges in order to support many more young people in this category.
	Alexandra's father later told us—I use his phrase—that she would literally have no life if this project had not come about. We could help hundreds or even more young people in this extreme category of low mental capacity to turn their lives around and thus become productive members of society. That is such a wonderful dream and is a perfectly proper definition to include in this clause which describes the nature of education and training. The Rose project does not meet any of the provisions in Clause 41, but to me seems to meet entirely what the Government are trying to do. I beg to move.

Baroness Morris of Bolton: I strongly support my noble friend Lady Perry in her amendment and I should like to speak to the amendments tabled in my name in this group. Those of us who were privileged to attend the meeting arranged by my noble friend Lady Verma with representatives of the Rose project were incredibly touched by the dedication of those running the charity, by the support of the local council and businesses, and most of all by the courage and determination of the young people themselves. It was clear that just to work out which bus to catch to go to work was a major achievement and that it would take more than two years for these young people to work up to the required hours of education or training. We should value what such young people can achieve rather than be too prescriptive. For these reasons, I fully support my noble friend's amendment.
	Clause 42 establishes attendance panels in each local authority to hear appeals by young people who have been issued with attendance notices. Amendments Nos. 131 and 132 are probing amendments intended to elicit information on how the Government envisage the composition of these panels, while Amendments Nos. 134 and 135 ask how independent they will be. It might be perceived as a conflict of interest if such panels involve members of the LEA against whom the appeal was being made. Can the Minister give the Committee some reassurance on this point.
	Amendment No. 136 would prevent Clause 42 coming into force until the Secretary of State produces an estimate of the cost of these panels. The Bill will place an increasing burden of responsibility on local authorities, but will not necessarily provide the requisite extra funding. If panels turn out to be overly cumbersome and difficult to fund, that may have the undesirable effect of slowing up appeals. Amendment No. 137 probes what the grounds of appeal might be, and whether they include the availability of suitable training provision. Amendment No. 140 seeks to ensure that there is no undue delay for a young person to make their case before an attendance panel. Given the short time during which the duty to participate applies, it seems sensible to make the bureaucracy as expeditious as possible, if that is not a contradiction in terms.
	The purpose of Amendment No. 157 is to ensure that regulations are introduced to direct both the procedure of making appeals and the hearing of such appeals. As drafted, the clause states that the Secretary of State may make regulations about both the procedures for appeals and,
	"the powers of an attendance panel",
	in hearing appeals. The Secretary of State could, therefore, decide not to publish such regulations, nor to lay them before Parliament for scrutiny and debate. On matters that are clearly judicial or quasi-judicial, there should be clear rules which Parliament scrutinises in some form. The amendment simply replaces the word "may" with "must", to turn a power into a duty. I hope that the Minister can assist with these points.

Baroness Sharp of Guildford: I support the noble Baroness, Lady Perry, on her thoroughly worthwhile Amendment No. 128. We also heard the presentation from the Rose project, and were very moved by it. At the moment, there is a gap in the Bill: those in full-time education and training do not have to attend an accredited course—although the probability is that they will get some accreditation from it—but those in work-based training have to have some clear accreditation at the end of the course that they pursue. There is that gap, and there are some with learning difficulties for whom sitting any sort of examination is very difficult indeed. It is, therefore, necessary to cover that circumstance.
	I shall now speak to Amendments Nos. 129, 130, 135A and 140A, which are in my name and that of my noble friend Lady Walmsley. My noble friend was, this afternoon, to have been putting the skills that she learnt in coxing to good effect in leading the Lords eight, but I gather that it has been rough and that they did not wish to have an inexperienced cox at the helm. I think that she was replaced there and became a mere bystander, which was a shame.
	Amendments Nos. 129 and 130 both relate to Clause 41, which sets out the description of the education and training that is regarded as being necessary. Clause 41(5) states:
	"The education or training must—
	(a) be appropriate full-time education or training, or
	(b) otherwise be suitable for the person, having regard—
	(i) to the person's age, ability and aptitude, and
	(ii) to any learning difficulty which the person may have".
	That is fine in setting it out clearly, but who will judge what is "appropriate" and "suitable"? Local authorities have experts at their disposal on these issues, whom they employ either directly or under contract. Those people are called careers advisers, and go though a relatively long period of training in order to learn those things.
	Amendment No. 129 suggests that it would seem appropriate that what is suitable should be,
	"in the opinion of a qualified careers adviser",
	while Amendment No. 130 gives us a definition of a careers adviser. However, that refers to an earlier definition. I should like to take the opportunity to read out the definition of the careers adviser in Clause 44 of the Education Act 1997. It states:
	"For the purposes of this section,
	(a) 'careers adviser' means a person who is employed by a body providing services in pursuance of arrangements made or directions given under section 10 of the Employment and Training Act 1973 and who is acting, in the course of his employment by that body, for the purposes of the provision of any such services; and
	(b) a careers adviser has responsibilities for any persons if his employment by that body includes the provision of any such services for them".
	I do not want to delay the Committee by reading out the lengthy piece from the Employment and Training Act 1973 defining what local authorities should do to provide a careers service, but I hope that your Lordships will take it from me that it is spelt out at some length. If there are people who are trained in these things, it is appropriate that they are employed to give advice about them. I hope the Minister will look kindly on my amendment.
	Amendments Nos. 135A and 140A are minor amendments that relate to the regulations under Clause 42 about setting up the attendance panel and, subsequently, the regulations relating to appeals. In both cases, the clauses put considerable responsibilities on local authorities with regard to what they should do about setting up these panels and what they should do in Clause 43 about appeal arrangements. On neither occasion is any mention made of consulting local authorities, yet if they are going to be required to do all these things it is appropriate that in developing these regulations the local authorities should be consulted about setting them up. I am sure the Minister has every intention of doing so, but it would be good if he could give us reassurances that that is the case.

Baroness Morris of Bolton: Before the Minister replies, the noble Baroness, Lady Sharp, mentioned the noble Baroness, Lady Walmsley, in the Lords eight. My noble friend Lord Lucas is also not here because he is in the eight. I am pleased to say that the Lords have just beaten the Commons.

Lord Dearing: I warmly support the amendments of the noble Baroness, Lady Perry. I am one of those who attended the presentation by the Rose project. It was moving, and one felt we had a duty to respond to it. It makes such a difference to these people's lives, and changing their lives helps us all. As the noble Baroness, Lady Morris of Bolton, said, to get a bus and go to work is an achievement; clocking on is an achievement. To do the job, the person or young person then needs a lot of help. It is not generic learning, it is specific.

Baroness Howe of Idlicote: I was one of the unlucky people who were unable to get to that meeting, but I have heard a lot about it since. The descriptions that have been given today are particularly relevant to this group of amendments, which must be included. I support all the other amendments that make the same important point, and I hope the Minister will be able to satisfy us on them.

Lord Elton: The noble Baroness has said everything that I would have said.

Lord Adonis: We need to begin by congratulating our team on having performed so splendidly on the river. Some might have thought that the timing of the race was specifically devised to ensure that many of the Government's chief critics were not able to be present. I regret, therefore, that the noble Baroness, Lady Walmsley, was doubly incapacitated both from being here and from being in the boat, but I am sure that it was her cheering from the towpath that clinched the victory.
	Amendment No. 128, tabled by the noble Baroness, Lady Perry, seeks to highlight the whole range of options needed to meet the full range of circumstances faced by 16 to 18 year-olds. I reiterate that young people in full-time education or training will not necessarily have to follow a course that leads to an accredited qualification in order to fulfil the duty to participate. It will already be possible for an attendance notice to specify some form of full-time education or training that does not lead to a qualification, if that is the appropriate thing for the young person. It will also already be possible for an attendance notice to specify part-time accredited education or training if the young person is working. Furthermore, if the young person has a mental health condition, as set out in the noble Baroness's amendment, that may constitute a reasonable excuse for not participating where Clause 39 prevents an attendance notice from being issued in any case. There will be no question of enforcement action being taken against those who have valid mental health reasons for not participating.
	Amendments Nos. 129 and 130, in the name of the noble Baroness, Lady Sharp, concern the role of careers advisers in advising on the appropriateness of courses. I assure her that no young person should get to the stage of receiving an attendance notice unless suitable learning provision has already been identified for them, and offered to them, along with the right support to take up the opportunity. We believe that a Connexions personal adviser would be the most appropriate person to make judgments on these issues, given their experience and knowledge of the system, the area and the young people within it.
	Amendments Nos. 131, 134 and 135, in the name of the noble Baroness, Lady Morris of Bolton, concern attendance panels. I assure her that it is intended that attendance panels will be independent. She asked specifically whether councillors and local authority employees would be members of those panels. We will clarify in regulations that someone employed by the local authority or the education institution in question should not serve on a panel. We will ensure that there is sufficient diversity among panel members and that they reflect the area in which the authority is based. Her Amendment No. 132 stipulates that panels should have three members. We intend that they should in most cases have three members, but we want to consult on whether they should be bigger in more complex cases. It would not make sense to introduce this inflexibility in primary legislation by fixing the number at three.
	As regards the noble Baroness's Amendment No. 137, Clause 43 requires that local authorities must make arrangements for a young person to appeal to an attendance panel against the attendance notice itself; the description of education or training that they must attend; and any variation in the notice. No grounds are specified so, as drafted, the provision already allows for the young person to appeal against the description on the ground of its suitability or, indeed, for any other reason.
	The noble Baroness's Amendment No. 140 concerns the timing of attendance panel hearings. I assure her that we wish appeals to be heard quickly. However, we do not believe it is appropriate to specify in primary legislation precisely how quickly they should be heard. We believe this matter is more appropriately dealt with in guidance, which we will provide to panels to assist them in carrying out their functions. These will be developed by my department in full consultation with local authorities, children's charities and young people themselves. Similarly, I assure the noble Baroness, Lady Sharp, that, as regards her Amendments Nos. 135A and 140A, we will take time in the lead-up to implementation to discuss with local authorities and other stakeholders how panels should be set up and how they should work. We will consult fully on our proposals before drawing up regulations under this clause, as well as under Clauses 42(1) and 48(3), as is routine. It is not necessary to put this requirement to consult in primary legislation.
	Amendment No. 157, in the name of the noble Baroness, Lady Morris, would change Clause 48 to state that regulations must be made by the Secretary of State. As I mentioned previously, attendance panels are a vital part of the process to enable young people's cases to be heard by an independent panel. We intend to make regulations, as they are important to define the detail of the process as regards the procedure of panels and their powers in relation to appeals. We state that regulations "may" be made by the Secretary of State, in case they are not necessary and do not have to be made. Changing the text to make the Secretary of State responsible for all these regulations would make no difference to the current situation, as the Secretary of State for Children, Schools and Families is already responsible.
	On Amendment No. 136, in the name of the noble Baroness, I repeat that the attendance panel is crucial to the effectiveness and fairness of the enforcement system. It will be put in place to ensure that attendance notices are always issued fairly, and that sufficient opportunity and support are given. It provides an additional safeguard to ensure that no young person can enter the enforcement system inappropriately. We will ensure that it is effective and not overly bureaucratic. The impact assessment we published with the Bill estimates the cost of those elements of the enforcement system in which attendance panels would be involved. As I mentioned, we want to consult widely on the composition and operation of attendance panels. In doing so, we will take careful account of the likely costs of their establishment and ongoing functions, which we have committed to funding. It is therefore not necessary to have this requirement written into primary legislation.
	Finally, Amendment No. 141 is a small, technical amendment to make clear for the avoidance of doubt that, where a variation to an attendance notice is provided for under this clause, all the requirements about the description of education or training in the notice still apply as they did to the original notice. The education or training must satisfy the central duty to participate, it must be suitable for the young person and so on.
	I was looking for my note on the Rose project to answer the specific issue raised by the noble Baroness, Lady Perry. We strongly support its work. Ministers from my department have met with it several times. The Rose project is an example of just the type of best practice we will be looking to expand when ensuring that the system set out in the Bill is fully prepared for learners in all circumstances by 2013.

Baroness Morris of Bolton: I thank the Minister for his careful consideration of my amendments. I am most reassured by his answers.

Baroness Sharp of Guildford: In response to my amendment, the Minister rightly said that careers advice for this particular group of young people would be provided by Connexions' personal advisers. Is he confident that enough people will be trained in this role? The Connexions services has been doing quite a good job with a limited number of young people, but if we are to implement this Bill, Connexions will probably need to serve more young people. Is he confident that they will be properly trained, that they will have at their fingertips information on the career and educational training paths for these young people, and be able to provide the necessary advice?

Lord Adonis: I stress to the noble Baroness as I did when we last debated this issue that the quality standards for young people's information, advice and guidance which apply to Connexions make clear its responsibilities in respect of all young people—their responsibilities do not simply apply to certain groups. She is right that their responsibilities will be enhanced under the Bill. Part of the reason for the five-year run-in period is to ensure that a sufficient number of suitably trained advisers can fulfil the additional functions under the Bill.

Baroness Perry of Southwark: I am extremely glad the Minister found his notes on the Rose project because I was much reassured by what he said. I had not been reassured by his earlier answer, from his brief, to Amendment No. 128. I thought at that point that he or his officials had rather missed the purpose of my amendment—no doubt that is my fault. It was specifically not to exclude from a requirement this category of young person. They do not want to be excluded; they want to be included.
	The point of my amendment was to find a way to include what they need—structured job support—in the definition of fundable education and training. The Rose project is not cost-free. At present it is supported by charitable and local authority donations and so on. If it is to be rolled out on a wider scale for this tiny minority of young people—it is not going to be hugely expensive—it will need to be funded properly. It will need to be caught up within the definition of education and training.
	Of course I know that severely mentally disabled or mentally ill young people will be excluded from the provision. Reassuringly the Minister has made that clear on many occasions. Yet this is a category that could be rescued. They do not need to be excluded; they want to be included. Anybody who had met them after their experience would know how tremendously valuable it is. I hope that on Report the Minister and his officials will have had another look at the Rose project and that we find some way of including this in the definition of recognisable education and training. In the mean time I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 129 and 130 not moved.]
	Clause 41 agreed to.
	Clause 42 [Attendance panel]:
	[Amendments Nos. 131 and 132 not moved.]

Baroness Garden of Frognal: moved Amendment No. 133:
	Clause 42, page 23, line 39, at end insert—
	"( ) The regulations shall provide for a duty on local authorities to make available independent advocacy services for those young people who would benefit from such services."

Baroness Garden of Frognal: I shall speak also to Amendments Nos. 138, 151 and 158, which are in this group.
	These amendments are supported by the Equality and Human Rights Commission. They refer to the constitution of the attendance panel, which we have been discussing, and the young person's interaction with it. We cannot overlook the need for a young person to have the right to be involved at all stages of the enforcement process and to have the chance to present their case to an attendance panel, either in person or through a nominated representative. The young people in question may well have difficulty in expressing themselves, they may not be on good terms with their parents and they may not have ready access to informed, impartial advice. This could make them particularly vulnerable and disadvantaged when facing the prospect of an attendance panel.
	Currently, the attendance panel can consider a young person's case at three points in time: first, on appeal against the attendance notice, as set out in Clause 43; secondly, on appeal against the penalty notice, in Clause 48; and, thirdly, at the decision whether the local authority can begin proceedings against the young person for failure to comply with the attendance notice, as set out in Clause 46. It is only at the third stage that the young person has the right to attend the attendance panel to put their case. The amendments would address that anomaly and send a clear message that the young person should be included in the full process.
	Barnardo's, which supports these amendments, points out that communication rights are set down in law and in the UN convention; but it also points out that young people are more likely to co-operate if they feel part of the process and have a chance to express their concerns. Being involved may also help them to gain confidence and to develop other interpersonal and practical skills.
	On independent advocacy, in Clause 48, it would be highly beneficial to young people and the Government if there were stronger advocacy powers in the Bill. A skilled independent advocate would empower the young person to make the right decision and help them to understand the requirements placed on them and to communicate their views. An advocate would also have the advantage of overcoming the formality of procedures, which may be daunting, and to make sense of language that may be confusing.
	This would not involve opening up an enormous process. These young people will form only a small group, and finding positive routes for them at the earliest stage will be of long-term benefit to them and society. We on these Benches strongly support these amendments. I beg to move.

Lord Elton: The noble Baroness has raised an issue that I shall raise in another context—when I speak to Amendments Nos. 228C to 228E. Common to both is a background document, the United Nations Convention on the Rights of the Child, which was open for signature in 1989 and came into force on 2 September 1990. Article 12 has two paragraphs, which I should read into the record. The first paragraph states:
	"States Parties shall assure to the child who is capable of forming his or her own views the right to express those views freely in all matters affecting the child, the views of the child being given due weight in accordance with the age and maturity of the child".
	The second paragraph, concerning advocacy, states:
	"For this purpose, the child shall in particular be provided the opportunity to be heard in any judicial and administrative proceedings affecting the child, either directly, or through a representative or an appropriate body, in a manner consistent with the procedural rules of national law".
	The question is not whether we should respond to that article in the way we draft the Bill but at what stage in the process affecting the child it should be brought into effect.

Baroness Morris of Bolton: My amendments in this group follow closely those of the noble Baroness, Lady Garden. I agree with the noble Baroness that it should be of the utmost importance for a young person, his advocate or his representative to be present at all relevant hearings. Young people will be much more likely to engage with the panel's decision if they are part of the process. I endorse the comments of my noble friend Lord Elton.

Baroness Howe of Idlicote: I support all these amendments. The Convention on the Rights of the Child is crucial here. It makes it clear that, in any proceedings affecting the child, they have the right to express a view. We are also talking about a new set of compulsions—I will not call them more than that. There are concerns about creating a criminal record. We are trying to avoid that and to make certain that it does not happen. Nevertheless, this is a new form of compulsion and it is essential that the child not only has the right to be heard but also the right to have an advocate to help them to express their views. That will be even more important when the child has a learning difficulty. I hope that we will have positive reassurances from the Minister.

Lord Adonis: I give those positive reassurances to the Committee. Amendments Nos. 133, 138, 139, 151, 158 and 159 would add detail to the attendance panel process. When the attendance panel considers whether it is appropriate for a local authority to begin proceedings against a young person in the youth court, Clause 46 states that regulations must ensure that the young person is invited to make representations to the panel. Clause 46(5) says that the regulations,
	"must make provision to secure that, before a recommendation under subsection (4)(c) is made"—
	that is, a recommendation to institute proceedings—
	"the person has an opportunity to make representations to the panel".
	We will also make it clear in regulations that the young person concerned could bring someone with them or send someone to make representations on their behalf. That was another concern of the noble Baroness, Lady Garden.
	The other amendments in the noble Baroness's group make a similar requirement where the panel is considering an appeal against an attendance notice, or an appeal against a fixed penalty notice, as set out in Clauses 43 and 48. We agree with what the noble Baroness seeks to achieve. We have committed to ensuring that the young person will be invited to attend proceedings or to bring someone with them to represent them in their place if they wish to. This will be put in regulations that will be made about the procedure to be followed by an attendance panel in hearing appeals and in making representations. The panel will also invite other people who understand the young person's circumstances to make representations.
	The noble Baroness's Amendment No. 133 calls for the provision of independent advocacy to be made available by the local authority for attendance panel hearings. I have described how the young person will be invited to bring someone with them or to send someone in their place. The attendance panel will not be set up like a court; it is not intended to be overly formal or intimidating. Its main role will be to review the circumstances of the case and the steps taken by the local authority and others to ensure that everything possible has been done to offer the young person an appropriate learning place and the right support to re-engage them in learning. Committing to advocacy for all would be unnecessarily bureaucratic and burdensome. However, if the case were to continue to the youth court, the young person would, of course, be entitled to legal representation.
	We have also committed to consider carefully whether the guidance given to local authorities should indicate that, where young people have specific needs such as problems with communication, there should be an expectation that they will have access to independent advocacy services. I hope that these reassurances go some way towards meeting the concerns raised by the noble Baroness.

Lord Elton: I am sure that the noble Lord will give me a reassuring answer. As there are so many regulations in view with this Bill, can we take it that the regulations will be in place before the relevant clauses come into force?

Lord Adonis: Yes—I hesitate slightly because they come into force in 2013 in a practical sense. However, if by "come into force" the noble Lord means by the time the Bill becomes law, I am not sure that the regulations will all be in place by then. There will be a process leading up to implementation—as long as it is clearly understood what "come into force" means.

Baroness Garden of Frognal: I thank all noble Lords who have taken part in this debate. Obviously, this is recognised in all parts of the Committee as being an important issue. I thank the Minister for his reply, which seems to offer reassurances. I shall read carefully what has been said. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 134 to 136 not moved.]
	Clause 42 agreed to.
	Clause 43 [Appeal arrangements]:
	[Amendments Nos. 137 to 140A not moved.]
	Clause 43 agreed to.
	Clause 44 [Variation and revocation of attendance notice]:

Lord Adonis: moved Amendment No. 141:
	Clause 44, page 24, line 41, leave out "(5)" and insert "(4)"
	On Question, amendment agreed to.
	[Amendment No. 142 had been withdrawn from the Marshalled List.]
	Clause 44, as amended, agreed to.
	Clause 45 [Offence of failure to comply with attendance notice]:
	[Amendments Nos. 143 to 150A not moved.]
	Clause 45 agreed to.
	Clause 46 [Restrictions on proceedings for offences under section 45]:
	[Amendment No. 151 not moved.]
	Clause 46 agreed to.
	Clause 47 [Failure to comply with attendance notice: penalty notice]:
	[Amendments Nos. 152 to 155 not moved.]

Baroness Sharp of Guildford: moved Amendment No. 156:
	Clause 47, page 27, line 15, at end insert—
	"( ) No penalty notice shall be issued under this section unless the local authority had previously agreed a learning support contract with the young person."

Baroness Sharp of Guildford: The amendment suggests that no penalty can be issued unless the local authority has agreed on a learning support contract with the young person concerned. It goes back to some of the earlier amendments that we proposed relating to personalised learning programmes. I confess that I was slightly surprised to find that we had tabled this amendment right at the end of Chapter 5. The amendment relates particularly to Clause 39.
	Clause 39 proposes the procedures necessary for a local authority to go through initially if a young person fails to comply with Clause 2, which is on participating in education and training, or work-based learning with sufficient hours of training attached. The young person should either attend school or college full time or find himself or herself work or training with the required off-the-job learning hours. Clause 39(2) states that an attendance notice must be issued and explained to the young person. Subsection (5) states that the local authority must take all reasonable steps to provide support to the young person and give time for that support to get up and running. In Clause 54, which we have not yet considered, the local authority is put under a duty to make available to the young person and to the young adults for whom it is responsible,
	"such services as it considers appropriate to encourage, enable or assist the effective participation of those persons in education".
	We know from our discussions in Committee that these services comprise the Connexions support and mentoring services that have been developed to help these young people into education and training.
	Why, therefore, table an amendment that asks for precisely that? The key word is "contract". The difference between what we are asking for and what is already being offered in the Bill is that we want a formal commitment on the part of the authority to meet the specific needs of the young person in question. We accept that the Bill already places a duty on local authorities to provide this support and that in Clause 55 the Secretary of State will specify in considerable detail what sort of services are to be provided. However, the crucial word "contract" is not there. Just as the Government think it useful to persuade parents to buy into the procedures via parenting contracts, we think that on occasions such as this it would be helpful if the young person concerned were also to recognise that he or she has rights and responsibilities under these procedures. That also means that the local authority cannot duck its duties or responsibilities.
	As we learnt during the passage of the Children and Young Persons Bill earlier this year, there are perhaps too many occasions when, faced with having to meet the complex needs of highly disadvantaged young people, local authorities or their employees ignore, or just fail to deliver on, the duties of support. A formal contract has advantages in giving both sides clear guidelines as to what is expected. I beg to move.

Baroness Morris of Bolton: I spoke earlier in Committee in support of learning support contracts and I believe that this is a fair additional safeguard.

Lord Adonis: As I said long ago on the first day of our deliberations in Committee, we are interested in the approach of learning and support contracts. We are grateful to the noble Baroness, Lady Sharp, Barnardo's and Rainer for highlighting this approach and its benefits. We know that an agreement that a young person has signed up to, where they understand their obligations and the consequences of not fulfilling them, can be very effective. We would like to encourage local authorities to pursue this approach or similar successful measures that have been developed locally before considering taking any more formal enforcement action against a young person. We could specify that in our guidance to local authorities.
	However, while we very much support the idea and the approach, we need to consider further whether it would be desirable to go further and set them out in primary legislation in the way that the noble Baroness suggests. That could risk making learning and support contracts too inflexible and prescriptive to respond to the specific needs of individuals, but I am happy to reflect on this issue further before Report stage.

Baroness Sharp of Guildford: I am extremely grateful to the Minister for offering to reflect further on this. It would be helpful if it were put either in the Bill or in guidance. An assurance that it would go into guidance would help on this occasion. As I have said, I am not sure that this amendment is necessarily in the right place but, if the Minister is to reflect further on it, he will decide for himself where it might appropriately be put. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 47 agreed to.
	Clause 48 [Penalty notices: appeal arrangements]:
	[Amendments Nos. 157 to 159 not moved.]
	Clause 48 agreed to.
	Clause 49 agreed to.
	Clause 50 [Crown employment]:

Baroness Verma: moved Amendment No. 160:
	Clause 50, page 28, line 5, leave out "persons working in either of those ways" and insert "service as a member of the armed forces of the Crown"

Baroness Verma: I suspect that my two amendments in this group are rather redundant in the light of the government amendments included with them. Nevertheless, I shall leave it to the Minister to speak to them as he sees fit. The amendments are probing. Clause 50 refers to Crown employment and how Crown employees are treated in relation to the duties in the Bill. Amendment No. 160 is designed to find out why there are regulations that institute exceptions and special rules for civil servants that do not apply to 16 and 17 year-olds in other employment. I understand that special modifications to the regulations will be necessary for those serving in the Armed Forces. The amendment has been drafted to keep the regulation-making powers in place but to take out reference to Crown employment. Clause 51 and my Amendment No. 162 deal similarly with parliamentary staff. These are simple points and, as I said, I think that the Minister will be able to deal with them. I beg to move.

Lord Adonis: In respect of Amendment No. 160, there is some doubt whether as a matter of law Crown employees such as civil servants in central government work under a contract of employment. We want this kind of work to count for the purposes of the duty to participate, of course, and Clause 50 makes that clear. The definition of "normal weekly working hours" in Clause 5 will need to be modified in relation to Crown employees, as they do not have a contract of employment as such. Regulations made under subsection (2) will enable us to do that. It is appropriate that such technical detail is dealt with in secondary legislation.
	Government Amendments Nos. 161 and 163 in this group clarify that the duties on employers in Chapter 3 apply to employment in this House and in another place. It is right that this employment should count for the purposes of the duty to participate—and the duties to check that a young person is in educational training and to release them to attend—to ensure that these young people can participate in the necessary learning. However, it would not be appropriate for local authorities to have powers of enforcement against this House or another place. The amendment clarifies that those provisions in Chapter 3 do not apply.
	Government Amendment No. 164 is a consequence of the new clause that we are introducing in relation to House of Lords staff. The relevant definition is included in the proposed new clause and can therefore be deleted from this one. Government Amendments Nos. 165 and 166 are minor and technical. Amendment No. 165 replaces the definition currently in the Bill of a member of House of Commons staff with a reference to an existing definition in the Employment Rights Act. Amendment No. 166 makes provision for who is to be treated as the employer in relation to House of Commons staff.

Lord Rowlands: Does my noble friend have any idea how many young people aged 16 to 18 are currently employed in both Houses?

Lord Adonis: I do not have that information but I will find out and let my noble friend know.

Baroness Verma: I thank the Minister for his response. As I suspected from his amendments, I was right that he would respond as he did. I shall read carefully what he said and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 50 agreed to.

Lord Adonis: moved Amendment No. 161:
	After Clause 50, insert the following new Clause—
	"House of Lords staff
	The following provisions apply in relation to employment under a contract of employment with the Corporate Officer of the House of Lords as they apply in relation to other employment—(a) sections 19 to 21;(b) sections 24 to 26."
	On Question, amendment agreed to.
	Clause 51 [Parliamentary staff]:
	[Amendment No. 162 not moved.]

Lord Adonis: moved Amendments Nos. 163 to 166:
	Clause 51, page 28, line 30, leave out subsection (3) and insert—
	"(3) The following provisions apply in relation to employment as a relevant member of the House of Commons staff as they apply in relation to other employment—
	(a) sections 19 to 21;(b) sections 24 to 26."
	Clause 51, page 28, leave out lines 42 to 44
	Clause 51, page 29, line 1, leave out from "staff"" to end of line 4 and insert "has the same meaning as in section 195 of the Employment Rights Act 1996 (c. 18)".
	Clause 51, page 29, line 4, at end insert—
	"( ) Subsections (6), (7) and (12) of that section (person to be treated as employer of relevant member of House of Commons staff) apply (with any necessary modifications) for the purposes of the provisions mentioned in subsection (3) as applied by virtue of this section."
	On Question, amendments agreed to.
	Clause 51, as amended, agreed to.
	Clause 52 [Financial penalties]:

Baroness Verma: moved Amendment No. 167:
	Clause 52, page 29, line 12, leave out from beginning to "must" in line 13

Baroness Verma: This amendment would remove a possible conflict of interests that would be created if the local authority received the proceeds of any financial penalties rather than the Treasury receiving them directly. If a body benefits from the proceeds of its own fines and penalties, there is an inbuilt incentive and pressure to impose those penalties, which removes impartiality from the process. It opens the body up to a perception, or even accusations, that it is more interested in revenue raising.
	My colleague Nick Gibb in another place, when making this point, made a comparison with parking fines, which is apt. Parking fines collected by local authorities give them a strong incentive to issue fines. I think the Minister will agree that there is a considerable public perception—accurate or not—that such fines are seen by local authorities as a cash cow. Will the Minister assure the House that the same would not be true of financial penalties levied under this Bill? I beg to move.

Baroness Garden of Frognal: We have some queries about these amendments. As a general principle, it is appropriate for the local authority which receives payments to have control over those sums and to use them for relevant local purposes. Any transfer of the sums to the Secretary of State surely would require additional administration and bureaucracy. It is difficult to see quite what benefit would arise from that. The noble Baroness, Lady Verma, has said that the sums could bring about a conflict of interests, but, realistically, the sums in question under Clause 52 would be payable by employers under Clauses 22 and 28 or by a young person under Clause 47. The likelihood that the local authority will consider these to be useful streams of income is not great. In the case of young people, the sums payable will be small, and recovering them may not be simple. As employers will play a crucial part in delivering work experience for young people, local authorities are more inclined to encourage them to participate, rather than discourage them by issuing penalty notices with a free hand. These safeguards make it unlikely that these powers, if granted, would be misused by local authorities.
	In that context, we would not support the deletion of the two lines which include the words,
	"may be used by the authority for the purposes".
	It seems more appropriate to amend,
	"paid in accordance with regulations to the Secretary of State",
	to,
	"regulations made by the Secretary of State".

Lord Adonis: These amendments would mean that all money received by local authorities as a result of penalty notices would have to be paid directly to the Secretary of State. Should the financial penalties we have provided for in the Bill be used, it is important that the money received from them can be used to cover the costs of administering the notices so that funding for that is not diverted from other services. It is usual practice for money received by government from the payment of fines to be used in this way. It is also important that it can be used only to administer the process and that income accumulated from fines cannot be used to raise money for the local authority.
	That is why we will specify in regulations that the only functions this money can be used for would be administering penalty notices. Where money is not needed for this purpose it will have to be paid to the Secretary of State. However, before the Treasury gets too enthusiastic, I should stress that we do not expect those sums to be great because by 2013 virtually all young people will be engaging successfully in education and training—so successfully, we hope, that they may not even have time to take their driving tests, and the income from parking fines might be accordingly reduced.

Lord Lucas: The difficulty with the parking regulations is that, although the same strictures on local authorities are in place, they are not enforced. It has become government policy not to enforce the requirement that receipts from parking regulations are used only on parking control functions, so they have become a cash cow for local authorities. I encourage the Minister to ensure that when he writes the regulations he gives the Audit Commission, the district auditor or whoever is appropriate a power to inquire into whether a local authority is acting in accordance with the regulations. That is a deficiency in the parking regulations that the local authorities walk through.

Baroness Verma: I thank the Minister for his answer. He offers the assurance that money raised from the penalties will be used only for enforcement of the provisions in the Bill. I can see where the noble Baroness, Lady Garden, is coming from. I will read closely the Minister's assurances. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 168 not moved.]
	Clause 52 agreed to.
	Clause 53 agreed to.

Lord Adonis: moved Amendment No. 168A:
	After Clause 53, insert the following new Clause—
	"Corresponding provision for Wales
	(1) This section applies if a Measure of the National Assembly for Wales includes provision that appears to the Secretary of State to correspond to provision made by section 2.
	(2) The Secretary of State may by order make provision in relation to Wales that corresponds to any provision made by sections 19 to 30.
	(3) Without prejudice to section 147(4), the power conferred by this section includes power to make provision in relation to Wales that corresponds to any of the following—
	(a) the provisions of the Employment Rights Act 1996 (c. 18) inserted by sections 31 to 33;(b) section 49;(c) section 50;(d) section 52 so far as relating to financial penalties under sections 22 and 28.
	(4) Power conferred by this section to make provision in relation to Wales that corresponds to any other provision includes power—
	(a) to apply that other provision in relation to Wales, with or without modification;(b) to amend that other provision so that it applies in relation to Wales, with or without modification."

Lord Adonis: Government Amendments Nos. 168A, 231A, 231B and 233B enable the duties on employers in Chapter 3 of Part 1 to be applied to Wales in future should the Assembly Government, having studied the impact of this legislation in England, decide to acquire the legislative competence to raise the participation age in Wales through a future legislative competence order and to bring forward a measure to do so. It is important that the duties on employers on either side of the border should be the same if the participation age is the same so that the system is easy to understand and potential burdens on employers are minimised.
	Amendments Nos. 231A, 231B and 233B ensure that, should the participation age be raised in Wales and the Secretary of State therefore uses his power to apply the provisions in Chapter 3 to Wales, any order will be subject to the affirmative procedure and Welsh Ministers will need to be consulted first. I beg to move.

Lord Rowlands: My Amendment No. 232 is linked to the government amendments in this group. First, I draw to the House's attention my interests as president of the National Training Federation for Wales and as an adviser to a Merthyr charity, Tydfil Training.
	Born as I was in 1940, I belong to the first generation of young working class children who were the beneficiaries of compulsory education under the great Education Act 1944. My mother, who was the brightest of us all, had been forced to leave school at the age of 14, as had almost all her generation. Through the Act, we were instilled with the value of and a passion for education, a means by which we could climb out of the pile and avoid going down the pits. It provided opportunities well beyond the expectations of the generation that preceded me.
	I reread some of the debates in both Houses on the 1944 Bill. I was pleasantly surprised—although the amount of time it has now taken has shaken me—that Rab Butler and the architects of that Act had aspirations for compulsory education beyond the age of 16 even then. In the debate about continuing education, even as far back as 1944, full-time compulsory education beyond the age of 16 was aspired to. It has taken us more than a generation to reach this stage, and I support the principles of a Bill that is a worthy successor to the Education Act 1944.
	I was frankly disappointed that the Welsh Assembly Government have decided not to share the enthusiasm held by many of us from that generation for the principles of this Bill. They make a sincere and powerful case: they believe that they will be able to create in Wales, through an innovative 14-to-19 agenda, an education system that is so attractive that everybody will want to take full advantage of it. I have to suppress my doubting Thomas instincts but I understand the aspirations behind it. To buttress that attractive menu of options, the Welsh Assembly Government are promoting a draft measure to increase learning entitlement for young people aged 16 to 18. They have taken the rather unusual step of publishing the draft measure before bringing forward a legislative competence order so that we can see the thinking behind it as a kind of alternative to accepting the measures in this Bill.
	The Welsh Assembly Government have drafted this entitlement measure and put it out for consultation. Unfortunately, some of us have found considerable deficiencies in it. Most are matters which should be debated internally, as they belong to the Welsh debate, but a fundamental one does not: the proposed legislation for a learning entitlement does not cover people aged 16 to 19 who are in employment and not receiving any learning or training. We need to reach out to this group who leave school at 16 and enter employment but have no entitlement to further educational training, and this Bill will reach out to them eventually through its obligation.
	My Amendment No. 232 seeks to bring one aspect of the Welsh scene within the Bill: people aged 16 to 18 should have an obligation and a right to a form of learning or training in and around the place of work. This is where the growth will and should occur. Where people are already employed is where one hopes to see the greatest opportunities, not only for young people but, I hope, for adults as well. My amendment seeks to cover 16 to 18 year-olds in employment but not in any education or training in Wales, because the proposed draft measures in Wales do not offer a similar entitlement.
	Since I tabled my amendment, the Government have come forward with their own. I welcome particularly the linking of the employment measure with the draft measure that might be promoted at some future date by a Welsh Assembly Government. It is important that there is provision in this Bill, as now proposed in my noble friend's amendment, to allow young people in employment and employers to be covered. Employment law is not devolved, so it could not be promoted as a learning measure in Wales. It must be promoted here. My noble friend's amendments are very important, as they will entitle and eventually oblige young people from 16 to 18 who are in work to undertake some form of learning in work. I hope that the Welsh Assembly Government will seize the opportunity provided by my noble friend in the Bill and pursue these principles and policies.
	In the mean time, what should happen? What should we do to assist and promote learning entitlement for young people who are, or will be, in employment but who do not necessarily receive any training? My noble friend kindly responded to my representations to him and others by sending me an English consultation document on the right to request training. I read it with considerable interest. I understand that it applies to adults and is supposed to complement the provisions in the Bill, but the principles and the model that my noble friend is promoting—the equivalent of the right to educational training and to flexible hours—are very good, and I hope and pray that he will help me to promote that concept to the Welsh Assembly and Welsh Assembly Government so that it can become an extension of learning entitlement for young people who are in work.
	Having said that, I sound a cautionary note. There is already provision in law entitling young people in work to educational training. As I understand it, Section 63A of the Employment Rights Act 1996 and a 2001 directive on time off for training are in place. The trouble is—this is anecdotally true of Wales; I do not know whether my noble friend has any figures for England—that this opportunity, this right, has scarcely been exercised. That is why this combination of right and obligation is important. We have bestowed rights on young people in work, but they have not been able to exercise them or they have not done so. Therefore, there is a requirement to combine this obligation and right in the Bill.
	I welcome and support my noble friend's amendments. I hope that the Welsh Assembly Government will pursue the opportunities created by them. Eventually, I believe, another generation will understand the value of and have the passion for education that I have as a beneficiary of the last great piece of legislation, the Education Act 1944.

Baroness Sharp of Guildford: We on these Benches understand and have a great deal of sympathy with what the noble Lord, Lord Rowlands, has said, but we also firmly believe, as he will know, that it is for the National Assembly for Wales to decide what is appropriate for that country. Therefore, although we have some support for his amendment, we support the Government's view that there should be enabling legislation that enables the Government in Wales to adopt this provision if they wish. For the moment, it is up to Wales to decide, rather than implementing this through legislation in this country.

Lord Adonis: I am completely at one with my noble friend Lord Rowlands in valuing the importance and potential benefits of introducing compulsory participation in education and training until the age of 18. I am also very grateful to him for his support for our policy. I hope that Members of the Welsh Assembly read his speech and appreciate his cogent arguments. I absolutely agree with him that it should be possible for the Welsh Assembly to decide to raise the participation age in Wales at some point in the future, and that we should ensure that this legislation does nothing to preclude that possibility.
	The Government of Wales Act 2006 allows the Assembly to acquire enhanced legislative powers through legislative competence orders. If, given the English experience, the Welsh Assembly Government decided to raise the participation age in future, they could propose a legislative competence order to seek powers to enable them to do so. We have been working with the Wales Office and the Welsh Assembly Government to ensure that this legislation does nothing to preclude that possibility and is drafted in a way that enables all aspects of the policy to be applied to Wales should the Welsh Assembly Government decide to pursue such an approach.
	A future legislative competence order could cover all aspects of Part 1, with the exception of the duties on employers. I moved the government amendments to enable the duties on employers in Chapter 3 of Part 1 to be applied to Wales, should the Assembly Government acquire the legislative competence to raise the participation age there, and to bring forward a measure to do so. As I say, this would need to be a decision that they would take in due course.

On Question, amendment agreed to.
	Clause 54 [Support services: provision by local education authorities]:

Baroness Verma: moved Amendment No. 169:
	Clause 54, page 30, line 9, leave out "services" and insert "information, advice and guidance about education and career opportunities"

Baroness Verma: If we are to guide young people in the right direction, we must be explicit about the nature of that guidance. That is the point of Amendment No. 169. Instead of the clause referring simply to services, the nature of the new statutory obligations should be made clearer. In that sense, this is a probing amendment to test the Government's commitment to, and understanding of, the need to offer the right range of advice and guidance on what is available to young people.
	I am concerned that Connexions is not the best means of providing the range of advice necessary to assist young people. I do not want unfairly to criticise Connexions; it does very good work. However, it is asked to do too much good work. I addressed the issue when I moved Amendment No. 111, so I do not need to repeat every point I made then. The gist of what I said was that Connexions is now almost too universal. It is not equipped to provide specialist careers advice. An all-age careers service that sat alongside Connexions, dedicated to advising on career choices, as the amendment labels them, would be a much better way of providing the advice and guidance required.
	Amendment No. 170 attempts to refine that further, so that young people with special educational needs have services tailored to their needs. Again, we have previously discussed the importance of helping young people with special needs. They should not be allowed to fall through the net because we have not done enough to help them. Amendment No. 176 reflects our desire to support high-quality careers advice and a highly professional careers service. By tying in the various strands of careers advice, we hope to create a strong interconnected system which provides high-quality advice for everyone who needs it. I beg to move.

Baroness Sharp of Guildford: I shall speak to Amendments Nos. 171, 174 and 175 in this group. Amendment No. 171 picks up the points made by the noble Baroness, Lady Morris, about special educational needs. We discussed these at some length. The evidence from authorities such as the Prince's Trust and Barnardo's which was given in another place before its detailed consideration of the Bill in Committee makes it clear that, given the right guidance, those with learning and behavioural difficulties can be brought back into the learning process, but it can take a great deal of time and patience. Amendment No. 171 picks up the need for support for these young people.
	The heading given to Part 2 is:
	"Support for participation in education or training: young adults with learning difficulties and young people in England".
	As the Committee knows, we are specifically considering some of the young people who have learning and behavioural difficulties. Provision for them should go through to the age of 25, as it does for those who ask for statements of their special educational needs. That should be done unless the young people themselves make it clear that they do not wish to pursue such a programme of support over that period. I should also say at this point that we have a good deal of sympathy for Amendments Nos. 169, 170 and 173, all of which make the duty on local authorities more specific and spell out the need to clarify precisely what sort of services are to be provided.
	Amendments Nos. 174 and 175 apply to Clause 55, which is concerned with the directions given to local education authorities on the support services they will provide. Amendment No. 174 suggests that rather than giving the Secretary of State discretion in whether to issue directions to local education authorities, he will have to do so, while Amendment No. 175 suggests that those who deliver these services should be properly qualified. It provides that,
	"such services must comply with the duties placed on local authorities by sections 8 to 10 of the Employment and Training Act 1973".
	To clarify that, Section 44(1) of the Education Act 1997 makes it clear that:
	"All registered pupils at a school to which the section applies must be provided during the relevant phase of their education, with a programme of careers education".
	That means education to prepare pupils to take decisions about their careers and help them to implement such decisions. The same section makes it clear that schools and colleges should co-operate with careers advisers when they are responsible for providing information, advice and guidance and defines the careers adviser as someone employed by the body providing these services in pursuance of these arrangements. That is the definition that I read out on a previous occasion.
	Amendment No. 175 makes it clear that the services to be provided under Clause 54 should conform to the pre-existing requirements placed on local authorities to provide proper information, advice and guidance within schools in order to meet their obligations to provide careers advice, and that this should be delivered by a qualified careers adviser as defined in the 1997 Act. These two pieces of pre-existing legislation should assure young people that they will have access to independent and impartial specialist careers advisers. We would like to see this provision in the Bill because there are serious concerns that these duties are not being fulfilled. We want a reassurance from Ministers that the directions to be issued by the Secretary of State will embody the principle and intention that this route to independent advice will be maintained and strengthened.

Baroness Perry of Southwark: I want briefly to express my support for these amendments, and I have added my name to Amendment No. 170. We should remind ourselves that young people with special educational needs form a high proportion of those who drop off the edge of the world, so to speak, at the age of 16. They end up as NEETs, living rough and in the courts, and generally they form a specific group in need of special support and encouragement which I hope a revivified Connexions service can give. When the Minister responds, I hope that he will address particularly the issue of young people with SEN because as they get older they also form a very high proportion of the prison population and exhibit many other severe social problems.

Lord Dearing: I hope that the Minister will be able to give a positive response to the thrust of these amendments. As I read Clause 55(1), unless the Secretary of State chooses to make directions, the duty is almost empty. A local education authority "must" make available this, that and the other such as it considers appropriate. That does not amount to anything. To give substance to these provisions, we need amendments of this kind, or clarity that regulations will be made.

Lord Adonis: The noble Baroness, Lady Verma, wishes to probe on the range of advice and guidance to be provided. I can give her a full description by pointing her toward the comprehensive new quality standards for information, advice and guidance which, over 17 pages, set out in detail the information, advice and guidance that all young people should expect to receive. These new standards will form a key part of the statutory guidance made under Clause 54. I am happy to circulate copies for Members of the Committee to examine. Amendment No. 172 would make it explicit that the local authority must provide,
	"generic information, advice and guidance, and ... targeted support"
	for individuals. That is set out in the quality standards. We also intend to emphasise their position as a core function of Connexions services through the directions that we propose to issue under Clause 55.
	Amendment No. 170 would require that Connexions services should be,
	"appropriate to the needs of the young person, including those ... with special educational needs".
	The noble Baroness, Lady Perry, also raised that issue. Clause 63 provides that,
	"a local education authority is responsible for any young person",
	who needs a service in that area. That includes those with special needs, and for those young people the duty extends up to age 25. Transferring the responsibility for Connexions to local authorities will enable them to better join up services that support young people with learning difficulties and to share knowledge and specialist resources. In addition, standard 4.8 of the new quality standards to which I referred a moment ago says that,
	"additional and sustained guidance and support is provided to those young people who have specific needs (e.g. those with special needs/learning difficulties and/or disabilities, Looked After Children, those with caring responsibilities)".
	The group of particular concern to the noble Baronesses is therefore specifically highlighted in the new Quality Standards for Young People's Information, Advice and Guidance.
	Amendment No. 171, in the name of the noble Baroness, Lady Sharp, would require that young people who need it receive,
	"individual support and guidance in order to comply with section 2".
	As we have discussed before, it is essential to the success of the Bill that this support is available, and I can reassure the noble Baroness that a number of clauses already provide for it. Clause 10 requires authorities to "promote the effective participation" of young people "in education or training", while Clause 39(5) requires them to take,
	"all reasonable steps to secure that relevant support is offered"
	to the young person before an attendance notice can be issued. Clause 54 requires them to "encourage, enable or assist" their,
	"effective participation in education or training".
	We realise the importance of that support, which is why we have published the new quality standards and doubled the investment in the Connexions services to £468 million in 2008-09, compared with the level that the former Careers Service received. We are therefore transferring the service to local authorities, which are best placed to join up and integrate all local services supporting young people, as that will ensure better targeting of individuals' needs and should provide greater efficiencies and free up more resources for the front-line.
	Amendment No. 171 goes on to require that "support and guidance" are available to all young people until age 25 or until the person,
	"makes it clear that they no longer wish"
	to receive the service. Connexions services, as Clause 63 states, already provide such support to people with learning difficulties up to their 25th birthday, but apart from those who require an extended transition period because of a learning difficulty, we are unconvinced that most young people, as they approach 20, want the same service as a teenager. We believe that they want an adult service, and that is what the Bill provides. The adult Careers Service is available for all people aged 20 and over and, as we discussed in the previous Committee sitting, the Department for Innovation, Universities and Skills has announced that it will introduce a new adult advancement and careers service from 2010-11, which will merge the existing adult Careers Service and work closely with Jobcentre Plus.
	In addition, Jobcentre Plus provides the New Deal for Young People for 18 to 24 year-olds, which offers support and helps them take stock of their skills and experience and then build on those to create better opportunities for work. The service is available to all young people with a history of being not in employment, education or training. With the Department for Innovation, Universities and Skills, the Department for Children, Schools and Families will be developing an all-age strategy for career advice to ensure that transitions between services are joined up.
	Amendment No. 175, tabled by the noble Baroness, Lady Sharp, enables the power to direct to specify that these services must comply with the duties placed on local authorities by Sections 8 to 10 of the Employment and Training Act 1973 and by Section 44 of the Education Act 1997. I shall take those references one by one. Section 10 of the Education and Training Act 1973 allows the Secretary of State to make arrangements with local authorities to carry out careers service functions and gives him the power to direct authorities in such matters. I can confirm that the power to make arrangements with local authorities for the delivery of careers service functions was used by the Secretary of State on 25 March this year. The relevant letter was sent to members of the Public Bill Committee prior to Report in another place and copied to Front-Bench spokespeople in both Houses. In addition, we already have a power to issue directions on this matter and will use it if it is deemed necessary.
	The amendment goes on to mention Section 44 of the Education Act 1997, which places a duty on schools and colleges to provide access to careers advisers from the Careers Service provided under arrangements made under Section 10 of the Employment and Training Act. Again, that is not necessary, as personal advisers from the Connexions service already have the power to access schools and other educational institutions under Clause 58 of the Bill. I hope that that reassures the noble Baroness in respect of those other legislative references.
	The noble Baroness's Amendment No. 174 provides that directions, as in Clause 55, shall be issued by the Secretary of State. I hope she will agree, from what I have already said, that we regard these directions as most important to the success of Connexions. We will consult formally on the content of directions when the Bill receives Royal Assent, taking careful account of the views expressed in the debates in your Lordships' House.

Baroness Sharp of Guildford: I thank the Minister for his response. I take note of what he has said. Will the Minister copy to us the letter that was sent from the other place? Once again communications do not seem to have been that good, and I regret to say that I have not seen the letter; had we seen it, we would perhaps not have tabled this amendment as it would have been unnecessary.
	I am interested in the new quality standards. Again, I would be grateful if the Minister could send us a copy. It would be interesting to see them; as he and others have made clear, the quality of information, advice and guidance services available to these young people is important. There have been some lapses in quality over the past few years. The Connexions service has faced problems by having two different duties cast upon it and insufficient resources to meet those double duties of, on the one hand, providing particular support for the NEET group we have been talking about a great deal and, on the other hand, continuing to provide general advice on careers to all young people in schools. That has been difficult for the service, and there have been occasions when in particular the general advice to young people in schools has been lacking.
	I am delighted that the Government have increased resources. It is extremely important that they do so. A great many new developments are in hand, including the web-based advice service which is being set up, and I welcome them all. As we discussed, with the development of the new diplomas and the enhancement of the apprenticeship service, it is extremely important that young people get proper advice and guidance about potential careers. Therefore, it is important that the services should be high quality, and that the Government should make clear the standards they expect to be provided.
	I thank the Minister for his reply, which I shall read carefully. I hope that he can provide me with the relevant information, in which case I shall have a chance to study it before we meet again after the recess.

Baroness Verma: I also thank the Minister for his response, to which I listened carefully. However, I remain unconvinced that these provisions will satisfy the future demands imposed on Connexions, particularly as regards advice for young people with special needs, as my noble friend Lady Perry and the noble Baroness, Lady Sharp, highlighted.
	I am grateful to the Minister for promising to circulate the new quality standards guidance and regulations. I am sure that noble Lords will read them with great interest. However, he did not fully answer our concerns that an all-age careers service should be set up to sit alongside Connexions. I fear that rather than this being an easily accessible service, it will be overly complicated. We may well find that the very people it needs to help will fall through the net. I shall read the Minister's response carefully, but at this point I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 170 to 173 not moved.]
	Clause 54 agreed to.
	Clause 55 [Directions]:
	[Amendments Nos. 174 and 175 not moved.]

Baroness Sharp of Guildford: moved Amendment No. 175A:
	Clause 55, page 31, line 13, leave out subsection (2)

Baroness Sharp of Guildford: I wish to speak also to Amendments Nos. 176A and 181A. I originally tabled Amendment No. 175A to draw attention to the micro-management element of Clause 55. Clause 54 makes it clear that it is the duty of local authorities to provide all-round support, including information, advice and guidance, to vulnerable and ordinary young adults in their care. It is reasonable that, as stated in Clause 54, in fulfilling this duty they should have regard to the directions and guidance issued by the Secretary of State. However, the degree of detail which Clause 55 suggests will be laid down by these directions seems unreasonable. It is symptomatic of the extent to which central government are now micro-managing local government services and removing any discretion from local government. It is no wonder that local democracy is in such a parlous state and that it is difficult to recruit people to stand as councillors and to recruit high-calibre people to work in local government.
	Having said that my original motivation for tabling Amendment No. 175A was to draw attention to micro-management, the more I look at Clause 55(2), the less I understand it. Therefore, I ask the Minister to explain what it means. Amendments Nos. 176A and 181A are tabled to highlight the fact that all these directions are being wished on local authorities and that these same local authorities and their service providers often have more expertise in these matters than central government because they provide these services on the ground, and therefore should be consulted about the directions that are issued.
	Amendment No 181A deals with the provision of information, advice and guidance via the internet. As I have mentioned already, I am all in favour of developing these web-based services which, along with others, I see as the future for the information-based services. We must always bear in mind that, besides information, advice and guidance need to be personalised. If local authorities and their service providers are to be the mainstream providers of advice services, they need to play a part in the commissioning of these other services. I beg to move.

Baroness Verma: We have a great deal of sympathy with the intentions of the noble Baroness, Lady Sharp. The amendments remove the unfettered power of the Secretary of State to issue directions to local education authorities to fulfil their obligations under Clause 54(1) to provide support for young adults with learning difficulties. Instead the amendments would have the Secretary of State consult the local education authority before issuing directions.
	The Bill has created a range of duties between various parties in Clause 54. The duty falls on local education authorities to provide services to support young people or young adults with learning difficulties so that they may participate in education or training. These are serious demands to make of a local education authority. We hope that they can be satisfactorily met but that will inevitably cost money and the prioritising of certain goals. At a time when local authorities are being asked to make more and more services available on tightening budgets, each education authority will have to make its own decisions as to how the needs of young people can be catered for.
	I hope the Government can accept that the nature of a local education authority means that different authorities will have different problems and must be allowed to find individual solutions to those problems. More centrally imposed rules and targets would be unhelpful to furthering the goal of providing support services. If the need arises for the Secretary of State to step in and issue directions, he or she is far more likely to achieve a satisfactory result if he or she has first consulted the local authority, found out what its problems are and worked through with the people on the ground how best to solve them. Any directions he or she gives have then been tailored to fit the needs of that local education authority and the people it serves.

Lord Elton: I also cannot resist rising to the bait of the noble Baroness's perplexity at this subsection. Having read it through three times myself I am reminded of that little conundrum where a man standing in front of a picture says:
	"Brothers and sisters have I none, but this man's father is my son".
	The answer is that he is looking at a picture of himself. It is exactly that sort of circular argument I find in this subsection. Of course I am wrong but the noble Lord will be hard put to prove it.

Lord Adonis: I agree that it is not immediately apparent on reading it what Clause 55(2) is seeking to achieve but I shall explain. I also welcome back to the Committee the noble Baroness, Lady Walmsley, from her great triumph this afternoon, to which reference has already been made in the debate. I had hoped that the race would take so long that the noble Baroness might not be able to join us. I see that she is in fighting form.
	Clause 55(2) is concerned with the effective delivery of a range of important services for young people. The subsection as drafted makes it clear that directions can require a local education authority to ensure that whoever carries out Connexions functions under Clause 54 also provides other services specified in the direction. According to subsection (3), those services need not relate to education but may relate to social security. For example, it is intended that, if necessary, the power could be used to ensure that local authorities and others providing Connexions services are also responsible for conducting a work-focused interview with young people using powers in social security legislation. That ensures that a range of activities that are aimed at helping young people into education, training and employment can be brought together in one place.
	Let me explain why this is important. We believe that it is very much to the advantage of the young people concerned that the Connexions service, which best understands the needs of young people and how best to support them, also conducts work-focused interviews and other relevant social security functions. It is therefore important that we have the power to direct to ensure that that does indeed take place. The practice over the past few years is that the Connexions service carries out those social security functions for the small number of 16 and 17 year-olds who claim benefits. We want to ensure that that sensible practice can continue. Carrying out those functions will take full account of the actual needs of the young people in question as they are carried out local authority by local authority.
	Amendment No. 176A would require that, before issuing any directions concerning the Connexions service, the Secretary of State would consult the relevant local authorities and have regard to their views. We are committed to consulting local authorities on the detail of the draft directions and we will do so formally after the Bill receives Royal Assent. We consulted the Local Government Association and the Association of Directors of Children's Services before issuing the current specifications for Connexions, to which authorities are currently directed to adhere under the Learning and Skills Act and which are identical to the proposed directions under the clause. The organisations raised no objections about authorities being directed in that way. I do not anticipate new objections being forthcoming but we will, as I say, consult them.
	Amendment No. 181A concerns Clause 59. That clause—subsection (3) in particular—provides the power for the department to contract with an appropriate body to deliver national services, such as the present Connexions Direct service. The noble Baroness's amendment would require the department to make such arrangements in conjunction with relevant local authorities and their Connexions providers. I am glad to tell the noble Baroness that the department already consults local authorities as part of the procurement process and that an authority representative sits on the project board. In addition, the contractor is required to work with stakeholders in particular authorities and their Connexions providers. It is therefore already our practice to make arrangements for the services in conjunction with authorities and Connexions providers. I hope that that meets the noble Baroness's concern.

Lord Lucas: I am still a little puzzled about how the provision will work. The Minister said that the direction will say that the local authority or the person exercising functions under Clause 54 must be a person who also exercises other prescribed functions; I understand that. But what if the person who exercises those other prescribed functions happens to be a school caretaker? The functions could be exercised by someone entirely inappropriate. There is not anything in the clause, so far as I can see, that says that a local authority has a right to transfer those functions that must be exercised together to someone whom its considers appropriate. The Minister gave the illustration of workplace interviews. Has it got the right to transfer that function to someone whom it considers appropriate? Is there a freedom under that legislation to move the functions that must be exercised together to the person whom it really wants to exercise the functions under Clause 54(1)? This provision simply describes the nature of the person to whom the powers can be transferred and assumes that that person is therefore appropriate to perform the functions under Clause 54(1). I remain confused by the wording.

Lord Adonis: I do not think that there need be that confusion. The functions on which the Secretary of State may make directions under subsection (2) refer to functions that are set out in subsection (1). Those are services of a kind that need to be provided by properly trained and qualified people. I do not think that the services in question could be carried out by, for example, a caretaker; they would need to be carried out by properly trained and qualified people who are employed by the local authority.

Lord Lucas: That runs things one way, but the clause seems to run them the other way. Those things set out in Clause 54(1) that must be done by someone properly qualified must be done by someone who exercises other functions. They must be transferred to somebody who is already exercising those other functions. There is something in the legislation concerning those other functions that allows them to be transferred back to someone who is appropriate to exercise those functions under Clause 54(1). I understand what the Minister is saying, but I do not know that the wording of the clause achieves what he says it does.

Lord Adonis: I am sure that it does, or else we would not have the clause before us. If I was not sufficiently clear in my opening remarks, I am happy to write to the noble Lord and specify with greater clarity how it does so. The alternative would be for me to repeat my opening remarks, but I do not think that the noble Lord would wish me to do that.

Baroness Sharp of Guildford: I am grateful to the Minister. I was satisfied with his explanation, but I take on board what the noble Lord, Lord Lucas, says about the literal interpretation of the way in which the subsection is phrased. It would be nice if legal language was not sometimes so obscure. I am grateful to the Minister also for his reassurances in relation to consultation with both service providers and local authorities over these other functions. Although he says that it is normal practice, these points were raised by the LGA in its briefing on the Bill, and therefore it seemed to me appropriate that we should get from the Minister some reassurance that local authorities would be consulted in this way. I thank the Minister for his response and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 176 and 176A not moved.]
	Clause 55 agreed to.

Lord Elton: moved Amendment No. 176B:
	After Clause 55, insert the following new Clause—
	"Assessment for specific learning difficulties
	(1) Each pupil in a maintained and voluntary aided school must receive an assessment for risk of specific learning difficulties—
	(a) before his sixth birthday;(b) in the second year after completion of Key Stage one; and(c) in the first year after Key Stage two.
	(2) The assessment shall be carried out by a prescribed person with prescribed qualifications.
	(3) The specific learning difficulties referred to in subsection (1) are—
	(a) dyslexia;(b) dyscalcula;(c) dyspraxia;(d) dysgraphia;(e) Asperger's syndrome;(f) attention deficit disorder;(g) attention deficit and hyperactivity disorder;(h) Meares-Irelen syndrome;(i) a high level of co-morbidity of any two or more of the above conditions.
	(4) In this section "prescribed" means "prescribed by order by the Secretary of State."
	(5) The Secretary of State may, by order, specify conditions to be added to those referred to in subsection (3) of this section."

Lord Elton: With diffidence and apprehension, I broach a subject that is even larger than I realised when I approached it. At Second Reading, I expressed my concern about the extent and consequences of dyslexia and related conditions in schoolchildren and young adults. I start by explaining why I am concerned at, and surprised by, this extent.
	Official SEN census figures show that only 78,000 children are either statemented or are on school action plans for dyslexia. A recent government-funded study, the No to Failure interim report, has shown that 55 per cent of pupils failing SATs at key stage 1 and 2 are at risk of dyslexia. That equates to around one in five pupils, or 2 million children. These children, on the whole, are not developing as they should. They are a reservoir of potential unrealised and talent unfulfilled. We have touched on the proportion of them who finish up in prison. They will also come under the umbrella of this legislation and as such point to a large hole in my amendment, which does not cover them at all. On Report, when we have the information that the Minister will give us about the situation as he sees it and the Government's attitude to it, it will be possible to bring that in. I recognise that this approach is in a way tangential to the approach of the amendments that have just been debated.
	I cannot leave prisons there. If we go down the road towards them, there are pupil referral units. A recent study by Xtraordinary People—a well named organisation—found that 65 per cent of pupils at a particular London PRU were dyslexic. It is established, under the school census figures from the department, that it costs an average of £9,900 per year to look after one child in a PRU. Assuming that only half that number are there for that reason, it still amounts to a colossal amount of money.
	The KPMG Foundation, an independent body, reported in 2006 in its Every Child A Reader programme that literacy difficulties cost the nation £2.05 billion a year. I say that slowly and with emphasis, because I hope that it will remain in the Minister's mind and in that of my noble friend on the Front Bench when the cry goes up that this is all very expensive. It would be amazingly cheap, and even cost-positive, if we got it right.
	To accelerate things a little, I shall pass over the prison question. I have a whole mass of briefing, which, if I am forced to, I shall deploy on Report. I shall just refer to the Bromley Briefings Prison Factfile. Almost 80 per cent of prison staff state that information accompanying people into prison is unlikely to show that the presence of learning difficulties or learning disabilities had been identified prior to their arrival in prison. Such people are more likely to be victimised than others; they are unable to access prison information routinely; they are likely to receive inadequate levels of support, although I hope that the Bill will put that right; and, because of their impairments, they are excluded from certain activities and opportunities.
	Some 20 per cent to 30 per cent of offenders have learning difficulties or learning disabilities that interfere with their ability to cope with the criminal justice system. There is a mismatch between literacy demands, offending behaviour programmes and the skill level of offenders. This is rather like the days before the Plain English Campaign had its effect on government publications, when literature was addressed to people with a reading age of 12 or 14 in the language of someone with an adult reading age. It is no good providing help to people in language that they cannot follow. Prisoners with learning difficulties and disabilities are excluded from elements of the prison regime, including opportunities to address their offending behaviour; the one possible approach to redemption and rehabilitation that they have. That may breach the Disability Discrimination Act.
	There are legions of these people and they should not be there. A great many of them are there because of failure earlier in their lives, which is why we need to put a system in place in primary and secondary schools that catches them. It is not good enough just to do it at the beginning, because these things can often only be caught later on.
	What I have in mind is not altogether clear from the amendment, but the amendment, or something like it, would be central to it. In every school, there should be someone sufficiently qualified to identify those who are at risk of dyslexia, dyscalculia, dyspraxia, dysgraphia, Asperger's syndrome, attention deficit disorder, attention deficit and hyperactivity disorder, Meares-Irlen syndrome, or a high level of co-morbidity of two or more of any of those conditions. There should be someone in every school who is able to say, "That looks like a possible case". That should discount at least 57 per cent of the school population. The remainder would be referred to a central resource—a visiting specialist, or whatever means the Secretary of State devises—who can go through the remainder and identify those at acute risk. Finally, the most highly paid person should be brought in, a specialist for the local authority, to provide the final diagnosis, resulting in a statement or whatever is appropriate.
	For that to happen, children have to be assessed at appropriate stages. The stages that I have chosen are before his sixth birthday, thereby giving the child time to be established in a school and for the teachers to get to know him or her; in the second year after completion of key stage 1, thereby allowing two years before the next stage, so that the whole programme is not reversed just before the key stage is reached; and in the first year after key stage 2, for the same reason. The way in which this should be done would be prescribed by the Secretary of State. He could say who was to do it and, more important, he would prescribe the qualifications necessary to do it.
	That brings me to training. The Government have training modules available for awareness of dyslexia and so on, but they are not mandatory. I suggest that there should be a mandatory element of awareness of dyslexia incorporated into initial teacher training programmes. I further suggest that every school inspector should be required to be thoroughly trained in this specialism, so that inspection in this area is properly carried out. I hope that I have made what I intend clear but, if I have not, this is Committee stage and I am very happy to return to my feet. I beg to move.

Baroness Morris of Bolton: I thank my noble friend Lord Elton for shining a spotlight directly on this issue. Noble Lords will know that I have spoken on the matter previously and that I firmly believe, as do many Members of the Committee, that too many children have learning difficulties that go undiagnosed. Such children begin to struggle at school not because they are bad or uninterested but because they are not able to keep up with their peers or with the teaching. It is these children who are at risk of falling so far behind that they simply drop out of the system altogether.
	It is essential that learning difficulties are identified as early as possible, so that those who suffer from them can be helped to overcome their problems and so that teaching can be tailored for their more specific needs. The list of learning difficulties specified in the amendment is a helpful indicator of the learning difficulties that can be diagnosed as hindering a child's educational development. My noble friend makes a valid point about initial teacher training. I hope that the Government will give this issue all the attention that it deserves.

Baroness Sharp of Guildford: Other noble Lords will know that I have spoken on this issue on many occasions. I have a great deal of sympathy with this amendment. It is important that there is early diagnosis and early treatment. Not long ago, I participated as governor of a small primary school in the permanent exclusion of a nine year-old. It was quite clear from the papers that accompanied the child that he had had difficulties more or less from the moment that he went to school. He had been diagnosed but, frankly, the amount of support that came through from the local authority was totally inadequate.
	I can remember that, when we talked about the Every Child A Reader programme, I asked the Minister whether it should be rolled out more widely. He responded by saying, "Ah, but it costs £2,000 a child". I pointed out that spending £2,000 per child at the age of six was infinitely better than spending £60,000 at the age of 16. That remains the case. Early diagnosis and support are vital.
	The noble Earl, Lord Elton, talked about the need for every school to have someone capable of making that assessment. A great deal of work is going on in training a special educational needs co-ordinator in schools and there is a great deal of CPD training for teachers in this area. In the primary school that I talked about, we have a talented SENCO, who has done and continues to do a great deal. Clearly, the amount of support from local authorities varies enormously from one to another and, in particular, there is a great shortage of educational psychologists. It is extremely difficult in some areas to get any consistent support from educational psychologists. Frequently you get one person, then another and then another. To be classed as requiring school action or school action plus, an educational psychologist must be present.
	In the school that I am talking about, 25 per cent of pupils are classed with special educational needs. We get visits from educational psychologists two half days a term, which is just not enough. There are needs and a long waiting list of children to see the educational psychologist for assessment. It is vital that sufficient educational psychologists are trained to support the sorts of services that children need.

Baroness Howe of Idlicote: I very much support what the noble Earl, Lord Elton, said, and the way in which he set it out. There is a huge cost in not addressing this issue much earlier. The postcode lottery aspect, as the noble Baroness, Lady Sharp, said, makes it crucial that more thought is given to how much more attention we can give to dealing with and supporting as far as we can young people with these problems. As has been mentioned, a huge percentage of young offenders in prison suffers from these sorts of problems. If anybody thinks that that is not costly, they have another think coming.
	I am glad to hear that teacher training is going on in some areas. A worried teacher's basic knowledge of when a child needs to be assessed is crucial, but I suggest that there is also a need to have, particularly in larger schools, a governor with training and experience. Training for school governors is not as compulsory as it should be. It takes place in some areas, but by no means all.

Baroness Sharp of Guildford: The noble Baroness might like to know that I have been designated the special educational needs governor of my school. I have not found time to attend the detailed training that goes with it, but I felt that the training that I had had in this House by going through various Bills, including the Special Educational Needs and Disability Bill, was helpful.

Baroness Howe of Idlicote: It is enormously reassuring to know both that the noble Baroness's school has appointed such a local authority person and that, as we know, she is more than well qualified; the school is extremely lucky to have her in that role. I hope that the Minister will give us some further reassurance, as every penny spent in this direction will save money in the long run.

Lord Dearing: We all feel strongly about this big issue in education. I am grateful to the noble Lord for raising it. In support of this amendment, I should say that, yes, to have early diagnosis is immensely valuable, but it must result in the allocation of resources. One knows that local authorities strapped for cash are reluctant to provide the resources required, and one has to be satisfied that the head will use those resources for the purpose for which they are provided; that is, to assist those young people. Perhaps there should be a Bill on this issue in its own right.

Lord Lucas: Is not one of the great lessons from West Dunbartonshire and other experiences that doing such assessments on all children provides knowledge and understanding that will avoid a great deal of expense later and will lead to much more success in the education of children? I am glad to say that a lot of schools take this issue seriously, pick up early on the conditions that children start school with, and take appropriate action. That is a pretty good formula for being a good school. All the needs of all the children are looked after and they are filled with the enthusiasm for learning which they need, particularly when they start secondary school, which can be a bit of a leap for many. It is just good practice, but it has not spread as it should have done. Perhaps that is because the connection between spending money up front and saving it later has been allowed to loosen. Given best practice, it should save us a lot of money, although it involves spending money now rather than waiting until there is a crisis later.

Lord Adonis: The provision of resources in this area has significantly increased in recent years. Planned local authority expenditure on special educational needs has increased from £2.8 billion in 2000-01 to £4.9 billion in 2007-08. Of course, the issue is to see that the money is spent wisely and that it is dedicated to special educational needs once it goes into the general budgets of schools. To ensure that that takes place, we need the eternal vigilance of governors, notably those with particular responsibility for special educational needs, such as the noble Baroness, Lady Sharp. The role that she performs on her governing body is essential to ensure that the interests of students with special educational needs are properly safeguarded.
	The issue, as ever, is how far we prescribe from the centre, which we need to keep under review. Elsewhere in our debates we are criticised for unduly prescribing to local authorities, let alone to schools, what they should do. Having earmarked this funding and seen that it is provided to local authorities, and making the requirements that we do in terms of the duties on governing bodies, we depend on them to take their responsibilities with the seriousness that I know the noble Baroness, Lady Sharp, and governors up and down the country do. I know that the noble Baroness, Lady Howe, in her role as president of the National Governors' Association seeks to reinforce with governors the acute importance of their responsibilities in respect of special educational needs. We support the NGA and governors in advice and guidance that we provide. Most local authorities provide training in this regard, but we need all local authorities to rise to the standards of the best.
	As Minister with responsibility for special educational needs, I completely agree with the noble Lord, Lord Elton, on the importance of early identification and intervention. All maintained schools have an ongoing statutory duty to identify and make suitable provision for children with special educational needs. As the noble Lord, Lord Lucas, said, the special educational needs code of practice highlights early identification and intervention as an important feature of effective provision for SEN.
	We are promoting greater awareness and improved confidence in recognising and addressing children's special educational needs through our inclusion development programme. The first phase of that, which is a systematic programme of training for teachers, includes resource materials for early education providers, schools and initial teacher training institutions on dyslexia and speech, language and communications needs. Subsequent phases will produce similar materials for autism and behavioural, emotional and social difficulties.
	The Children's Plan, published last December, acknowledged that more needs to be done.

Lord Elton: Is the provision to which the Minister has referred embodied in a mandatory module or is it voluntary? The difference is very important.

Lord Adonis: The inclusion development programme is voluntary. However, we are introducing new units into initial teacher training in respect of the undergraduate course followed by a large proportion of primary teachers. Of course, it is at the primary level particularly that early identification is needed. Those units within the undergraduate teacher training course have been piloted successfully. A few weeks ago I attended a launch event with all undergraduate providers of teacher training courses to make those units available to them and strongly to urge that all providers include them within their undergraduate courses. I did so alongside Sir Jackie Stewart, a tireless champion of improvements in teacher training in this area. He made an impassioned case for all providers to ensure that they embed these units within their courses.
	I have not made them mandatory because, again, I am anxious not to over-prescribe, in this case, what university education departments should do. However, we could not have done more to urge upon the undergraduate providers of teacher training courses the importance of the new units and the great difference that they can make to the ability of primary school teachers to meet the special educational needs of their pupils. The pilots were successful and the universities that were engaged in them have strongly urged other university departments to take up these new units. I shall keep the noble Lord informed about progress in the take-up. But, as I said, we have not gone to the final stage of making them mandatory because I am conscious of the balance that we need to keep between urging good practice on local authorities, schools and university departments, and making effective provision available to them, but not seeking overly to prescribe precisely what they should do in respect of their own provision.
	However, we have gone that stage further in mandatory training for special educational needs co-ordinators in schools, to which the noble Baroness, Lady Sharp, referred. Every school must have a special educational needs co-ordinator. We reviewed the position of SENCOs long and hard and we decided two years ago that we would make their training mandatory and accredited nationally. We are in the process of introducing that training and discussing with the teacher associations how we can do so in a way that meets the needs of SENCOs and leads to a significant improvement in the competence with which they carry out their functions.
	We are prepared to consider mandatory measures where we believe they are critical to improvements in schools. No one is more important to the overall provision of special educational needs services in a school than a SENCO. It is essential that there is one senior teacher who has a thorough grasp of the school's responsibilities in this area, and that is why we have taken the step of requiring mandatory training for SENCOs.
	The Children's Plan, which we published last December, announced funding of £18 million further to improve school workforce knowledge, skills and understanding of special educational needs through initial teacher training and continuing professional development. That £18 million is funding, among others, the developments that I outlined to the Committee a moment ago.
	Furthermore, in May this year, the Government asked Jim Rose, who conducted the 2005 review of the teaching of reading in primary schools, to make further recommendations on the identification and teaching of children with dyslexia. We expect to receive Sir Jim's recommendations early next year. He will look in particular at the issue raised by the noble Lord, Lord Elton, as to the provision of more specialist teachers able to carry out functions, including assessments. He will take account of developments since 2005, including the Every Child a Reader programme referred to by the noble Baroness, Lady Sharp, which we introduced in conjunction with KPMG. It is a great example of the Government working in partnership with charitable and other agencies to bring about change.
	Latest evaluations show that over 86 per cent of children who received reading recovery in year 1 went on to meet national expectations in reading at the end of key stage 1 in comparison to 84 per cent nationally. This is very welcome news. Reading recovery is an intervention programme targeted at five and six year-olds who are experiencing difficulty with learning to read; we are significantly expanding it over the next three years. Sir Jim Rose played a crucial part in our decision to allocate substantial government funding to the Every Child a Reader programme, which is taking forward reading recovery. For all the reasons set out by the noble Baroness, Lady Sharp, we believe that every penny of this is well spent in promoting the capacity of children to engage properly in learning at a later stage and avoiding all the dangers of young children falling into patterns of unproductive behaviour, as the noble Lord, Lord Elton, set out. We are doing a great deal in this area, and I believe it is leading to a sustained improvement in provision for children with special educational needs, but I fully accept that there is always more to be done.

Lord Elton: I am most grateful to all who have taken part in this debate, particularly the Minister, who has again proved that his heart is in the right place. We just need to make sure that his pocket is full enough. I know that Governments want swift returns for investment, and this is the great difficulty in doing anything to reduce offending or improve employability, because what you do for the child of five is a reward to the state when the child becomes an adult. The Minister can comfort himself with not only KPMG's figures but also the Prince's Trust's figures. It reports that £70 million is lost to the economy per week due to educational underachievement in terms of productivity resulting in foregone income. The amounts of money to be saved are enormous. As I said to start with, we are looking at a great pool of potential unrealised and talent unqualified. I conclude by saying:
	"If anything motivates me in politics it's this. When I see potential unrealised, and talent unfulfilled, and opportunity denied, that's where we've got to be and it's the right economic future as well as the right way of dealing with opportunity in our society".
	I am quoting the Prime Minister, George Brown, in a speech made in May 2008. We are all on the same side here, but if all that marvellous money was saved, think how much he could take off petrol tax.

Lord Adonis: I should say in parentheses that the Prime Minister is Gordon Brown. George Brown very much wanted to be Prime Minister but he lost in an election to Howard Wilson.

Lord Elton: My biggest comeuppance in politics was when I was standing in Loughborough and, thinking I had done frightfully well, asked the person who had driven my most distant supporter, an old lady on the edge of Bosworth constituency, whether she had said why she voted Conservative. He said, "She said that George Brown is such a nice gentleman, you have to vote Tory". It made me realise that I had been wasting my time. I will not waste your Lordships' time. I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.
	Clause 56 agreed to.

Baroness Morgan of Drefelin: I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.
	House resumed.

Criminal Evidence (Witness Anonymity) Bill

The Bill was returned from the Commons with the amendments agreed to.
	House adjourned at 7.09 pm.